Public Disclosure Authorized it b ) 3 A P E R *P Sdocuments.worldbank.org/curated/en/831441468778484831/pdf/multi... · Box 8 BATNEEC Definitions in the U.K. 16 ... LCPD Large Combustion

)_ ~~E N V I R O N M E N Tb 3 ~D E P A R T M E N Tit *P A P E R S PAPER NO. 46

TOWARD ENVIRONMENTALLY AND SOCIALLY SUSTAINABLE DEVELOPMENT

~ POLLUTION MANAGEMENT S E R I E S

Environmental Managementand Institutions in OECDCountries: Lessons fromExperience

Magda Lovei and Charles Weiss, Jr.

March 1997

* A'A KEnvironmentally Sustainable Development The World Bank

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Pollution & Environmental Economics Division

Environmental Managementand Institutions in OECDCountries: Lessons fromExperience

Magda Lovei and Charles Weiss, Jr.

March 1997

Papers in this series are not formal publications of the World Bank. They are circulated to encourage thought and discussion.The use and citation of this paper should take this into account. The views expressed are those of the author and should notbe attributed to the World Bank.

ContentsAcknowledgments

Abbreviations

Executive Summary i

Environmental Policy Making iLegal and Regulatory Framework iiAdministrative and Institutional Framework iiiConclusions and Recommendations iv

Introduction 1

The Elements of Environmental Management IEnvironmental Management and Performance in OECD Countries I

Purpose of this Study 2

1. Environmental Policy Making 5

Political Commitment 5

Priority Setting 6Cross-Sectoral Integration of Environmental Policy 8Consensus Building 8Public Access to Information and Participation 10The Role of Non-Government Organizations 13Policy Implementation Approaches and Instruments 14

2 Legal and Regulatory Framework 21

Environmental Legislation 21Distribution of Political and Administrative Authority 22The Role of Courts 25Ombudsman 27Supra-National Integration of Environmental Policies and Legislation in the European Union 27

3 Administrative and Institutional Framework 31

Evolution of National Environmental Protection Agencies 31

The Administrative Control of Environmental Protection Agencies 34

Organizational Structure of Environmental Authorities 39Human Capacity of Environmental Management 41

Technical Background 42

Conclusions and Recommendations 47

Bibliography 51

Boxes and Tables

Box 1 Threats to the Environmental Protection Agenda, and the Role of Public in the U.S. and Japan 6Box 2 The Emergence of Risk Assessment in Environmental Priority Setting in the U.S. 7

Box 3 Integrated Environmental Policy in the Netherlands 9Box 4 Public Pressure and Policy Response to Forest Dieback in Germany 11

Box 5 The Use of Referendum in Environmental Decision Making 12

Box 6 Government-NGO Relationship in the Netherlands 13Box 7 Illustration of Technology Requirements in the U.S. Legislation 15

Box 8 BATNEEC Definitions in the U.K. 16Box 9 Increasing Role of Fiscal Instruments in OECD Countries 17

Box 10 "Landmark" Environmental Court Decisions in Japan 26Box 11 National Interests and Consensus Building in the EU: The Case of Large Combustion Plants Directive 29Box 12 Bottom-up Development of Environmental Management in Japan 33Box 13 The Evolution of Environmental Protection Authority in France 34Box 14 Distribution of Environmental Protection Responsibilities Among Government Agencies in Sweden 35

Box 15 "Gyoseishido" or Administrative Guidance and Pollution Control Agreements in Japan 36

Box 16 Example of Voluntary Environmental Regulation in the U.S. 37Box 17 ISO 14000 - Voluntary Compliance Program, New Corporate Management Approach, 38

and Inventive Marketing ToolBox 18 Administrative Changes Support Integrated Pollution Management in the U.K. 39

Box 19 Integrated Permitting in France 40Box 20 Development of Air Pollution Monitoring System in the U.S. 43Box 21 Changing Approach to Environmental Research in the U. S. 44

Table 1 Examples of Environmental Legislation in the U.K. 22

Table 2 Transfer of Regulatory Power During the Creation of National Environmental Protection Agencies 32

AcknowledgmentsThis report was prepared by Magda Lovei (World Bank) and Charles Weiss Jr. (Global Technology Manage-ment, Inc.) under the guidance of Richard Ackermann. The authors are thankful for their contributions toSarah E. Brayman, Just Heldring, Sue Klein, Andrew Lean, and Andras Sajo; and for valuable comments toGordon Hughes, Yasuhide Koga, Michelle Keene, Dan Beardsley, Ruth Bell, Edith Brown-Weiss, RebeccaHammer, Frances Irwin, and Sheila Jasanoff, as well as staff of the World Bank's Legal Department and theOrganization for Economic Cooperation and Development (OECD). The authors would like to thank SriyaniCumine for administrative support. The work was supported by the Mediterranean Enviromnental TechnicalAssistance Program (METAP), which is financed by the Commission of the European Communities, the Euro-pean Investment Bank (EIB), the United Nations Development Programme (UNDP), and the World Bank.Views and conclusions expressed in this paper are those of the authors and should not be attributed to METAPdonors.

Abbreviations

BAT Best Available TechnologyBATNEEC Best Available Techniques Not Entailing Excessive CostBCT Best Conventional Technology

BOD Biological Oxygen DemandBPEO Best Practical Environmental OptionCAC Command-and-ControlCEC Commission for the European CommunitiesCEGB Central Electricity Generating BoardCFC Chlorofluorocarbon

CO Carbon MonoxideDIN German Industry StandardsDOE Department of EnvironmentDRIRE Direction Regionale de l'Industrie, de la Recherche et de l'EnvironnementEIA Environmental Impact AssessmentEIB European Investment BankEIS Environmental Impact StatementEMAS Eco-Management and Audit SchemeEU European UnionCK HydrocarbonHMIP Her Majesty's Inspectorate of PollutionIPC Integrated Pollution ControlISO International Organization for StandardizationLCPD Large Combustion Plant DirectiveMAFF Ministry of Agriculture, Fisheries and FoodMETAP Mediterranean Environmental Technical Assistance ProgramM1TI Ministry of International Trade and IndustryMOE Ministry of EnvironmentNAMS National Air Monitoring StationsNEPP National Environmental Policy PlanNGO Non-Government OrganizationNO. Nitrogen OxidesNRA National Rivers Authority

NRC National Research CouncilOECD Organization for Economic Cooperation and Development

PMKO Particulate Matter smaller than 10 micronsPCA Pollution Control AgreementPSI Pollutant Standards IndexRIVM State Institute for Public Health and Environmental Protection of the Netherlands

So. Sulfur OxidesSO2 Sulfur DioxideSRETIE Service for the Research, Study and Treatment of Environmental Information in FranceTRI Toxic Reseases InventoryU.K. United KingdomUNDP United Nations Development ProgrammeUNEP United Nations Environmental ProgrammeU.S. EPA United States Environmental Protection Agency

VDI Association of German EngineersVOC Volatile Organic Compound

Executive Summary

Environmental management is a complex system of commitment to deal with environmental protectionconcept, values, processes, rules, and formal and was often prompted by tragic accidents andinformal organizations and behaviors that translate publications in the mass media. Today,public preferences and goals into actions in order to environmental awareness is strong; well organizedinfluence environmental quality. Over the past popular "green" movements exist with influentialdecades, significant environmental improvements lobbies in several OECD countries; and thehave taken place in OECD countries. However, programs of traditional political parties have beensome problems have remained unsolved, new ones influenced by environmental concerns.have emerged, and there has been a constant gap In order to increase social welfare, policy makersbetween some national environmental objectives and are expected to prioritize environmental measuresactual achievements on the ground. relying on tools and mechanisms that rank

As environmental protection is attracting environmental problems according to the risks theyincreasing political attention and public support, pose to human health and the environment. Inmany developing countries are designing and practice, however, decisions on environmentalputting into practice environmental institutions. To issues are not simply technical and economic, butassist them in carrying out this task, this study also depend on value judgments and political andanalyzes the experience of several OECD countries equity considerations. Additionally, impreciseto identify (i) factors that influence the role and scientific information and technical knowledge leavesuccess of environmental management; (ii) possible significant room for political bargaining. Mechanismscauses of the discrepancy between national for interaction and consensus building among all affectedenvironmental objectives and actual performance; parties, therefore, become important key elements ofand (iii) implications of lessons learned and environmental policy making.recommendations for countries that are in the The availability of systematic public informationprocess of establishing or re-designing their on the environment is a powerful tool to facilitateenvironmental management systems. the interaction of policy making with the general

public. However, mis-interpreted or mis-Environmental Policy Making represented information may lead to inappropriate

policies. The availability of public information, theThe experience of OECD countries shows that the extent and form of public participation in policykey to sound environmental management is the decisions, and other consensus-building mechanismsdegree of importance that the public and its depend on traditional political decision makingrepresentatives assign to environmental matters. styles and regulatory approaches. In the U.S., wherePublic pressure plays a key role in drawing the political traditions are distrustful of theattention of policy makers to environmental government, environmental policy making has beenproblems. Historically, the emergence of public open, and has involved broad public participation.awareness of environmental problems and political In several countries in Europe (for example in

Pollution Management Series i

Environmental Management and Institutions in OECD Countries: Lessons from Experience

Germany, France and the U.K.), on the other hand, instruments have been widely applied in severalgovernments traditionally were given wide latitude European countries, but they were largely resisted inin policy-making which was carried out by a the U.S., where a strong aversion exists towards newrelatively small group without strong formal taxes. On the other hand, the traditional Americanparticipation of the public. However, traditional support of free markets may have contributed to apolicy making mechanisms have been changing, and larger appeal of tradable permit schemes tonow there is relatively little difference in this respect American policy makers.among OECD countries.

Environmental policies of OECD countries have Legal and Regulatory Frameworkdeveloped in a piecemeal fashion, frequentlyexpressing absolutist goals. In the past, Environental legislation cannot be enforced unlessEnvironmental protection was viewed and designed as an it is compatible with existing administrative,add-on to existing technological, economic and technical and economic capabilities foradministrative systems: environmental policies implementation and enforcement. Historically,focused on "end-of-pipe" solutions to pollution environmental legislation has evolved from sporadicproblems; environmental protection was "attached" laws and regulations of economic sectors andto the management of various environmental sectors environmental media. The piecemeal pattern ofand media; and new institutions were established to early environmental legislation often resulted indeal with environmental issues. Such environmental overlaps and potential contradictions, reinforcingmanagement did not reflect, however, the complex the fragmented policy approach and institutionalinteractions among different environmental media responsibilities. The emergence of comprehensiveand economic sectors, and did not express a need to legislation has been inter-related with theintroduce considerations of environmental development of integrated environmental policy andprotection at earlier phases of economic and regulatory approaches and the establishment oftechnological planning. Since such an approach separate environmental protection agencies.resulted in the transfer of problems from one sector National, regional and local systems ofand environmental medium to another, and environmental administration follow existingrequired in increased costs and duplications in patterns of administrative organization andregulation and implementation, integrated allocation of jurisdiction among the different levelsenvironmental policy approaches were gradually of government. Though federal states areintroduced in most OECD countries. decentralized by nature, different degrees of

Despite the theoretical advantages of market- allocation of power exist. In strong federations likebased instruments, command-and-control Germany, states have only the powers expresslyenviromnental policy implementation approaches delegated to them. In looser federations like thehave dominated, relying on various versions of U.S., the division of jurisdiction between state andstrictly technology-based and largely uniform federal authorities is not always well defined. Thestandards. Command-and-control regulation was degree of the decentralization of political andsuitable to the add-on policy approach, and it was administrative authorities similarly varies in unitaryattractive to various political interests. Once a states. In centralized systems, administrativecommand-and-control-based regulatory framework functions may be concentrated in the national capitalbecame entrenched, it became extremely resistant to as, for example, in the U.K., or "deconcentrated" inchange due to well established constituencies and offices which report to the national government butvested interests. Although command-and-control which are located at the regional or county level, asbased policy regimes have produced significant in France. In more decentralized systems, (forresults, they also often resulted in wasteful use of example, the Dutch and Swedish), local and regionalresources. As policy makers search for cost-effective authorities carry more functions and responsibilities.solutions to achieving environmental goals, market- Additionally, the need to address environmentalbased instruments are gaining increasing acceptance issues that cut across political and administrativeand political support, supplementing the largely boundaries has led to voluntary cooperation amongcommand-and-control-based regulatory framework. political and administrative units and thePolitical preferences, traditional styles of decision establishment of river basin management agencies tomaking, and country-specific factors have influenced coordinate environmental regulations and thethe choice of these instruments. On one hand, fiscal management of water resources and quality.

ii Environment Department Papers

Executive Summary

The role of the judiciary system in environmental sector became insufficient. The new environmentalmanagement depends on traditional styles of policy protection agencies, however, often remainedmaking and enforcement. Courts have not played a powerless within a well established institutionalmajor role in environmental policy implementation framework with entrenched interests andand enforcement in European countries or Japan. By administrative linkages. Frequent changes in thecontrast, in the U.S., certain stages of environmental administrative status of environmental protectionpolicy-making and implementation are frequently agencies in the OECD countries support the view thatsubject to court review, with the result that acts of institutions develop only gradually.the legislator, policy-maker, regulator, or interested Today, national environmental agencies exist inprivate parties are carried out with an eye on the OECD countries in the form of a ministry, part of alikely reaction should a court review later take place. ministry, or an independent (or semi-independent)However, extensive reliance on the judiciary system agency. The critical factor is the priority given to thefor enforcement, which is typical of the adversarial environment by the government through the Cabinetpluralist regulatory style, has often led to delays and or other major cross-sectoral coordinating body,increased costs of implementation. This has resulted rather than the cabinet status for the environmentalin the introduction and increasing use of less protection agency which is, therefore, oftenconfrontational approaches in policy making such as symbolic. Additionally, some environmentalregulatory negotiation ("reg-neg"). protection responsibilities often remain in the hands

As the economies and political systems of of institutions that were traditionally involved in theWestern European countries gradually become management of certain economic sectors orintegrated in the framework of the European Union environmental media. Under a well functioning(EU), a supra-national harmonization and coordinating mechanism and oversight ofintegration of national environmental policies and environmental policies, such division oflegislation is taking place. The formulation of EU responsibilities does not normally create a problem.environmental policies involves a lengthy political Conflicts of interest may arise, however, if operatingconsensus building process influenced by national functions are combined with the responsibffities ofand sectoral interests. EU directives, therefore, often environmental protection.deviate significantly from the original proposals, The relationship between governmentreflecting large compromises. Additionally, bureaucracies and elected officials is an agent-significant national variations exist in the principal relationship in which elected officials areeffectiveness of implementation. EU environmental trying to ensure that the bureaucracy follows theirpolicies influence national environmental policies, policy intentions. Elected officials, therefore, maylegislation and management practices in many ways; restrict the discretion of agencies in setting rules,for example, environmental quality standards have granting permits, enforcing and providingbeen coordinated, the application of environmental exceptions to compliance, influencing regulatoryimpact assessments has become standard practice, style and the relationship between regulator andand the provision of public environmental regulated entities. In Japan and many Europeaninformation has been widely required. countries, environmental protection authorities have

significant discretion in privately negotiating withAdministrative and Institutional Framework industries and allocating licenses on a case-by-case

basis. In the U.S., the discretion of the EPA is moreThe administrative and institutional framework is an limited by Congress and the adversarial regulatoryinherent part of the environmental management culture, however, new approaches such as "reg-neg"system. It facilitates and supports the environmental and voluntary programs have been introduced topolicy making process, and ensures the allow for increased flexibility and a larger focus onimplementation and enforcement of policies. changing behavior at the micro level.Government agencies appointed and authorized by Environmental authorities usually owe theirelected officials to carry out these tasks are the main origin to an amalgamation of pre-existingpillars of environmental administration. Separate organizations and personnel responsible for theenvironmental protection agencies were established environmental issues of the various environmentalwhen historically developed regulation of media. As a result, environmental authorities haveenvironmental protection by the ministries and typically allocated responsibilities and staff alongagencies responsible for the economic activity in that media specific lines, and their professional skill mix

Pollution Management Series iii


did not reflect the optimal ratio of technical and consensus building between regulators, businessesmanagerial staff. This organizational and human and the general public.resource structure has reinforced a piecemeal * The ability of the administrative, legal andenvironmental policy approach, and limited cross-sectoral institutional system to translate environmentalintegration. This pattern is changing, however, as objectives into actions, as determined by the (i)increasing efforts are made to integrate cross-media institutional, technical and human capacity of theand cross-sectoral considerations into the administrative system; (ii) ease and mechanisms offormulation and implementation of environmental cooperation among authorities at all administrativepolicy through administrative reorganization and levels; (iii) degree to which legislation andtraining, as well as administrative procedures such regulations consider administrative capacities andas environmental impact assessment and integrated facilitate policy implementation; (iv) flexibilitypermitting: allowing cost-effective responses to environmental

Effective environmental management requires regulations; and (v) gradual adjustment andscientific and technical knowledge and a capacity to development of institutions to reflect a growingmake informed, feasible, and acceptable decisions. importance assigned to environmental issues.OECD countries, therefore, relied on extensive Based on the experience of OECD countries,national and local monitoring networks and research environmental management systems in developingcapacity either within the environmental protection countries could benefit from the following policies:agency (as, for example, in the U.S.) or in * Strengthening mechanisms and vehicles ofindependent institutions (as, for example, in building political commitment and public pressureGermany). Several countries have increased their through systematic provision and interpretation ofreliance on computer modeling in order to reduce public information on the environment; and supportthe costs of monitoring (for example, the of environmental organizations and localNetherlands and Germany), and re-focused their environmental initiatives;environmental research efforts on better * Introducing mechanisms and tools that helpenvironmental priority setting (for example, the balance the benefits and costs of environmentalU.S.). measures in order to support policy makers in

settingfeasible environmental priorities, and avoidingConclusions and Recommendations absolutist, unachievable goals;

a Creating a framework and mechanism forThe conclusions of this study are that the following consensus building among the major stakeholders ofkey factors influence the performance of environmental policy issues to ensure the politicalenviromnental management: acceptability and support of policy objectives;

* The importance attached to environmental * Introducing mechanisms and proceduresprotection in political decision making, and the that facilitate the consideration of complexcommitment of the government to address environmental impacts of decisions and actionsenvironmental problems. These are influenced, in starting with priority areas;tum, by (i) the public's concern about environmental * Introducing a balanced mix of directproblems and its access to meaningful information regulations and incentive based policy implementationon environmental issues; and (ii) the existence of instirumetts in order to ensure flexibility and cost-mechanisms for public pressure on environmental effectiveness; anddecisions. * Adopting a gradual approach to the

* The capacity to identify feasible environmental development of environmental institutions, ratherobjectives through (i) appropriate techniques and than introducing complex foreign institutional andmechanisms of setting priorities; (ii) cross-sectoral regulatory models.and cross-media coordination of policies; and (iii)

iv Environment Department Papers

IntroductionThe Elements of Environmental ones influenced by attitudes, customs and moralManagement traditions.

Environmental management may be evaluatedEnvironmental management is a process that entails from various aspects: (i) the efficacy of the systemthe (i) recognition of environmental problems; (ii) that reflects both the extent to which enviromnentalemergence of public awareness and political com- issues are addressed in a society depending on themitment to address these problems; (iii) formulation values assigned to environmental matters by theof environmental policies; (iv) expression of policies public, and the extent to which these values arein regulations and legislation; and (v) implementa- translated into political decisions; (ii) the effectivenesstion and enforcement of policies. Bressers and that shows how successfully environmentalHonigh (1986) describe the framework of analysing protection goals are achieved; and (iii) the efficiencyenvironment management by a simple three-phase of environmental management that indicates howmodel: in order to achieve something, first one well environmental objectives are achieved using ashould want to achieve it (commitment and goals); given amount of human, technical, institutional, andsecond, one should know how to achieve it (instru- other resources.ments, rules); and third, one should have the power(administrative and institutional framework) to Environmental Management andachieve it. Similarly, Branes (1991) described the key Performance in OECD Countriescomponents of environmental management thefollowing way: Highly polluted urban air, deteriorating water

* Policy that expresses the environmental quality, and the human health threat of highly toxicobjectives of a society based on scientific information substances used in industrial and agriculturaland value judgments about conflicting political and processes were the first signs of environmentaleconomic interests; problems that led to increasing concern and a need

* Law as one of the key tools of policy for government intervention in highly industrializedformulation and implementation; and OECD countries. Complex environmental

* Administration that provides a framework management systems were developed over the lastfor developing and translating policy objectives into decades, resulting in significant environmentalaction. improvements. Due to the complexity of factors

Environmental management is also a complex influencing the economic, political and socialsystem of concepts, values, processes, rules, and systems and the quality of environment, exact cross-formal and informal organizations and behaviors country comparison of the success of environmentalthat translate public preferences and goals into management systems is difficult. However, itactions in order to influence environmental qualitY. appears that most countries have made comparableWhile basic operative norms of environmental progress in improving several aspects of theirmanagement systems are provided by legislation, environmental performance during the last decades.formal rules are always supplemented by informal

Pollution Management Series 1

Enviromnental Management and Institutions in OECD Countries: Lessons from Experience

A dramatic decline of atmospheric particulate standards in the early 1990s, and full complianceconcentrations took place in most large urban cities, with NOx air quality standards has never beenespecially in the 1970s. Annual average sulfur achieved in metropolitan areas (OECD, 1994b).dioxide concentrations also dropped by 45 (U.S.) to Ground water quality has been deteriorating in60 Japan) percent, and atmospheric lead many areas of Germany (OECD, 1993). In Dutchconcentrations were reduced substantially. The rivers, typical concentrations of phosphorus andpercentage of populations served by domestic nitrogen were two times higher than the nationalwastewater treatment increased significantly (for target, and the number of violations under theexample, 87 percent in the U.K., 86 percent in Pollution of Surface Waters Act was increasingGermany, 71 percent in the U.S.) (OECD, 1996), and (OECD, 1995b). Pollution incidents from industry,previously polluted waters became available for sewerage and agriculture are still common infishing and bathing. The elimination of such highly England, many of these causing severe damagetoxic substances as lead, DDT, and asbestos from (OECD, 1994c).commercial use has significantly reduced humanhealth risks. Purpose of this Study

However, the experience of OECD countries hasnot been all positive. Despite significant successes, Environmental protection is attracting increasingseveral environmental problems have not been political attention and public support in manysolved, while new ones have emerged. The control developing countries as well as transitionof diffuse sources that contribute to surface and economies. New environmental legislation isground water pollution generally has not been very introduced and administrative structures are beingsuccessful. In the U.S., for example, phosphorus and fundamentally restructured to respond to ansuspended solid concentrations declined in rivers, increasing need for improved environmentalbut nitrates and salinity often increased as a result of management. In this process, these countries canagricultural activity and atmospheric depositions. reasonably expect to draw from the lessons learnedThe accumulation of toxic substances in the by industrialized countries in the design ofsediments of surface water bodies also remained a environmental management systems.constant problem. Volatile organic compounds Several developing and transition economies are(VOC) and nitrogen oxides (NO.) concentrations seeking to harmonize their economic andhave increased in urban areas in most countries, environmental regulations with those of the largerfrequently exceeding national ambient standards. international community. Many also have anTraffic-related air pollution and the proper disposal obligation - and may be under internationalof household and industrial waste pose increasing pressure - to harmonize their regulations withconcerns in many OECD countries. international treaties on biodiversity, climate

Additionally, there has been a frequent gap change, protection of the ozone layer, and thebetween national environmental quality objectives transboundary movement of hazardous waste.and actual performance. This is especially obvious if Trends towards regional and global harmonizationwe look beyond aggregate averages. In the U.S., for of trade and markets (for example in the frameworkexample, despite the fact that air quality of the European Union and the North American Freesignificantly improved in the cities, still about 62 Trade Agreement), and initiatives to setmillion people lived in designated non-attainment international standards for environmentalareas for one or more criteria pollutants in 1994, and management at the company level emphasize theforty percent of rivers, 45 percent of lakes and 33 need to study and learn from the experience ofpercent of estuaries could not support designated others.uses (OECD, 1996). In Japan, where annual average This paper looks at the practices and experienceconcentrations of airborne particulates decreased of a number of OECD countries (France, Germany,from 60 microgram per cubic meter (JLg/m3) in the Japan, the Netherlands, Sweden, the Unitedearly 1970s to 40 p.g/m3 in the mid 1980s, ambient Kingdom and United States) in developing theirparticulate standards were still only met at about 50 environmental management systems. All thesepercent of all monitoring stations by the early 1990s countries are economically well developed advanced(OECD, 1991). In some prefectures (Tokyo, Osaka industrial democracies, affected by a set of commonand Kanagawa), only 19 percent of roadside environmental problems. Not all of the elements ofnitrogen oxides (NO,) measurements did not exceed their environmental management systems may be

nitrogen oxide(NO.measaremetsdinotxc suited, therefore, to the circumstances in developingcountries.

2 Environment Department Papers

Introduction

Studying the evolution of environmentalmanagement in OECD countries may prove to bemore useful for developing countries than theanalysis of the current state of affairs. The paper,therefore, draws heavily upon past experience andtrends in environmental management. Rather thananalyzing every element of a complex set ofenvironmental issues, it focuses on the issue ofpollution management In order to facilitate thelearning and selection process, the paper seeks toanswer the following questions:

* lhWhat factors influence the role and successof environmental management?

* MA/at are the reasons for the discrepancybetween national environmental objectives andactual performance?

* What are the main lessons learned and whatdo these imply for countries that intend to establishor improve their own pollution managementsystems?




1 Environmental Policy MakingPolitical Commitment representation in the 1993 legislature election

(Harrison, 1995). In some cases, "greens" mayPolitical commitment to address environmental become coalition partners for non-majorityissues has evolved gradually in OECD countries. parliamentary parties. In Sweden, for example,Historically, tragic accidents such as the Minamata "greens" occasionally hold the balance of politicaland Itai poisoning cases in Japan, the lethal London power at national and county levels. Europeansmog and the Torrey Canyon oil tanker accident in "greens" also occupy seats in the Europeanthe U.K., the Love Canal incident in the U.S., as well Parliament. Although "green" parties are oftenas reports and publications about environmental general protest parties with a broader agenda, theirproblems (for example Rachel Carson's Silent Spring role is important in introducing environmentalin 1964 in the U.S., and the Limits to Growth report concerns to the political decision making process.for the Club or Rome by Meadows et al in 1972) The world-wide rise of popular interest in thecontributed to the public's growing concern about environment has also influenced the agenda of otherthe environment. By the end of the 1980s, the parties across the entire political spectrum. In Japan,majority of people surveyed in OECD countries was for example, environmental and anti-pollutionwilling to give priority to the protection of movements have had a strong impact on localenvironment, even at the risk of curbing economic politics. A substantial "greening" of both majorgrowth (OECD, 1991). parties took place in the U.K. during the 1980s. In

Environmental movements, organizations and 1986, for example, the Labor Party published itsparties have introduced environmental concerns, environmental proposals that were well received byalternative ways of life and other "green" ideas into environmental groups. In 1988, the Conservativesthe political agenda. In some countries (for example, also embraced the concept of sustainableU.S. and U.K.), well-organized popular "green" development. Other parties soon followed suitmovements exist with active and influential lobbies, making their own political statements aboutin others (for example, Germany and Sweden), environmental protection (Garner, 1996). In the"green" political parties compete with traditional U.S., environmental issues are part of the programsparties for seats in the Parliament. One of the most of both the Democratic and Republican Parties.successful "green" parties in Western Europe, Die During the history of building their environmentalGrunen in Germany, captured seven percent of the management, however, several OECD countriesvotes in the 1994 general elections, and more than have gone through periods when the politicalten percent in sub-national elections in several states leadership gave low priority to environmental(Harrison, 1995). "Green" parties appear to receive matters, and in some cases has sought to reversestronger support in sub-national than national previous progress in this area (Box 1). In each case,elections. In France, for example, the support of such efforts were thwarted by public pressure."green" candidates amounted to 15-19 percent (for The OECD experience has clearly demonstratedexample, in Alsace, Rhone-Alpes and Ile de France) that the importance ascribed to environmentalin the 1992 regional elections, but they failed to gain problems in a country and in its government is the



most imnportant underpinning of the entire system of characteristics of harm caused to human health, theenvironmental management. The "bottom line" is ecology and quality of life based on scientificwhether the public and business community base evidence -, cost-benefit and sensitivity analysestheir behavior on the tacit assumption that the offer useful tools to support policy makers to setgovernment and the society are serious about priorities by facilitating the comparability of variousenvironmental protection. It is not specific policy options relying on scientific evidence andorganizational or institutional arrangements that expert judgment (Box 2).determine the success of environmental In practice, however, imprecise scientificmanagement. More important factors are the public information about the causes, impacts, and costs ofpreference to pursue environmental protection environmental damage, uncertainties about thegoals, the reflection of that preference in political alternatives and costs of corrective actions, and thecommitment, and the predictability and reliability of variance in values that may be assigned to presentthe govermnent to act according to this and future environmental quality introduce largecommitment. uncertainties into cost-benefit analysis.

AdditionaLLy, the choice of priorities inherentlyPriority Setting blends a set of technical, political and ethical

considerations. Hourcade et al. (1992) pointed outPolicy makers should have a mechanism of that scientific uncertainty provides "space forprioritizing environmental problems in order to maneuver" in a negotiation process in which vestedtackLe them in the most effective way. The interests may influence decisions based on unprovedremediation of environmental problems generates scientific hypotheses. Additionally, priority settingsocial and individual benefits by avoiding damage has become increasingly complex, with emergingto humans, materials, and nature. However, regional and global environmental issues affecting aremediation is not without public and/or private range of regions, countries and country groups withcosts. Environmental management is desirable if it different economic development, social system, andincreases social welfare, requiring that the gains preferences.from intervention exceed the costs. Focusing on Instead of making difficult trade-offs, policythose measures that saisfy this criterion results in makers are often tempted to choose absolutist goals,socially desirable outcomes. Policy makers are such as the total protection of human health fromexpected, therefore, to determine acceptable risks by environmental damage, in expectation of strongbalancing the costs and social benefits of public support. Breyer (1982) caDLed suchenvironmental protection based on the best available bureaucratic behavior the "Tunnel Vision," pointingscientific information. Risk-assessment - the out the difficulties in determining "how clean isprocess that estimates the form, dimension, and clean enough" and "how safe is safe enough".

Box 1. Threats to the Environmental Protection Agenda, and the Role of the Public in the U.S. andJapanDuring the mid- to late-1970s, when the slow-down in economic growth began to overshadow environmentalspending as a political priority, the U.S. Environmental Protection Agency (EPA) faced the possibility of beingmerged with the Department of the Interior and hence losing some of its funding and political weight. TheAdministrator of U.S. EPA realized the need for favorable and supportive public and political opinion, and"positioned" enviromnental protection issues in terms that appealed to this support most U.S. EPA's centralmission was revised from the maintenance of ecological balances to the protection of human health. This shift instrategy allowed the U.S. EPA to acquire new resources at a time of general budget austerity. A challenge wasalso posed to advances of strong environmental policy in the U.S. during the early 1980s, when the U.S. EPA, aswell as the Department of Interior (which is responsible for natural resources) became under conservativeleadership. Public opposition to cutbacks in environmental services and enforcement, again, forced a return to anapproach more supportive of environmental protection.

In Japan in the early 1980s, the Minister responsible for environment declared his formal opposition to anti-pollution measures, which had been adopted in response to public outrage over public health emergencies causedby industrial pollution. The Ministry abandoned previous measures designed to facilitate public access tocompensation for pollution-induced damage. However, pressure from municipal and local governments and thepublic, as well as intemational partners forced the Government to reconfirm its commitment to enviromnentalprotection. It also recognized the potential in the export of environmentally friendly products and technologies.


Envrionmental Policy Making

Box 2. The Emergence of Risk Assessment in Environmental Priority Setting in the U.S.Beginning in the mid-1980s, dissatisfaction with the ad hoc development of U.S. environmental policy began to beheard from the highest levels of the U.S. EPA. Scientific and public doubt arose over the severity of the risks posedby the environmental "time bombs" which attracted attention earlier, and there was growing concern about newenvironmental threats (such as the depletion of ozone layer, global warming, and the extinction of species). "Manypeople no longer believed that all environmental problems were urgently pressing" (Davies, 1995).In response to the growing concern of the public and congress about the increasing costs of environmentalprotection, the U.S. EPA Administrator brought together 75 career managers and experts from all parts of theagency in 1986 and 1987 to evaluate the relative risks posed by a number of major environmental problems whichthe agency was assigned to address. By focusing on environmental risk, U.S. EPA was attempting to set up acommon basis for the discussion of disparate issues and for the evaluation of alternative environmental policiesand tools.

Thirty-one problems were selected to correspond to the legislative and programmatic organization of the U.S. EPA.They were grouped into four categories: human cancer risk, human non-cancer health risk, ecological risk, andwelfare risk. Comparison focused on "residual risks," or those risks that remain after currently-required controlshave been applied. The project was unique in that personnel from all parts of the agency worked directly on therisk calculations rather than delegating them to the U.S. EPA Office of Policy Analysis. Also, the staff was requiredto assess the problems in a context that went beyond their traditional bureaucratic turf that was defined byprogrammatic structures and legislated activities.

The outcome of this work, Unfinished Business: A Comparative Assessmcnt of Environmental Problems, found that theagency's priorities corresponded more to public and congressional perceptions of environmental risk than to thescientific basis on various issues.

Unfinished Business was sent to the Scientific Advisory Board (SAB) to be evaluated and updated in light of morerecent scientific data.' Specifically, the SAB was asked to examine strategies for reducing major risks and torecommend improved methodologies for assessing and comparing risks and risk reduction options. (The U.S. EPAhad not focused on this area of research in the past.) The SAB committee working on this assignment was dividedinto three subcommittees: Ecology and Welfare; Human Health; and Strategic Options.

The Board's response was published in the document, Reducing Risk: Setting Priorities and Strategies forEnvironmental Protection (1990). Reducing Risk recommended that the most advanced techniques for assessing andcomparing risk be utilized to facilitate the choice of environmental projects and objectives in the U.S. EPA. Thecommittee suggested that the distinctions among environmental problems at U.S. EPA were not conducive to goodevaluation of relative risk, nor to choosing the most effective actions to reduce environmental risks. It also foundthat many of the methods used to measure the benefits of reducing risk were inappropriate and inadequate.Finally, it recommended that risk assessment be used at many levels of decision-making and, in particular, thatlocal governments, which are generally responsible for implementing national environmental policies, alsoincorporate relative risk assessment into their strategic planning.

Implementation of the recommendations of Reducing Risk is moving ahead, although slowly. In 1992, the U.S. EPAreleased a report, Strategies and Frameworkfor the Future, laying out strategies to set priorities and make policydecisions. These strategies include integrating risk analysis into the strategic implementation of the agency'sstatutory mandates, improving its science and information base, using economic incentives and encouragingtechnological innovation, encouraging intemational cooperation, and improving public outreach programs.

"Tunnel Vision" leads to requirements to clean up on the benefits ignoring compliance costs. In thethe last ten percent of pollution even if the social U.S., for example, the Federal Water Pollutionbenefits would only justify a 90 percent clean-up. Control Act of 1972 aimed at banning all dischargesThe costs of pursuing absolutist goals usually of wastes into public waters without regard to theoutweigh the benefits. Since societies can rarely receiving water capacity, a goal that has proved toafford such costs, overly ambitious environmental be overly ambitious and costly. In certain cases (forgoals typically remain unfulfilled. example, the Safe Drinking Water Act), legislation

In response to public concerns, the intention of has specifically prohibited the consideration of costsgovernments to demonstrate their commitment to and benefits of alternative regulatory approachessolving emerging environmental problems often (Luken and Fraas, 1993). The Clean Air Act alsoresulted in ad hoc approaches and an exclusive focus mandated ambient air quality standards to protect



human health with a considerable margin of safety, pollution devices (scrubbers, cooling towers),expressly outruling cost considerations. unnecessarily increasing capital and operating costs.

Pollution control requirements were often set The experience in OECD countries has clearlywith faith that technologies existed or would soon be demonstrated that environmental issues cannot bedeveloped to reduce pollution to zero. Strict compartmentalized by medium or by sector,emission limitations on vehicular emissions in the encouraging administrators to seek some form ofU.S. (for example, the requirement of 90 percent integration. In the Netherlands, for example, thereduction in VOC, CO and NOx emissions between strategic document entitled To Choose or to Lose,1970 and 1975-76) could not be met by new car based on a major research project by the Statetechnology, and actual reduction was closer to 50 Institute for Public Health and Environmentalthan 90 percent (Breyer, 1982). Although the Protection of the Netherlands (RIVM), found in 1989concept of risk assessment has been accepted by that significant revisions would be needed in themany policy makers, risk analysis has rarely guided Dutch environmental policy if the country was topriority setting. After an extensive review of achieve its goal of sustainable development. Theregulatory impact analyses, Luken and Fraas (1993) RIVM study resulted in the setting of national long-concluded that "in no case does it appear that U.S. term targets that took into account all sectors andEPA chose the regulatory alternative that cross-media impacts of environmental policy, andmaximized net benefits". became in effect the first Dutch national

environmental plan (Box 3). In the U.K., theCross-Sectoral and Cross-Media Integration Environmental Protection Act of 1990 introducedof Environmental Policy Integrated Pollution Control (IPC), requiring the

selection of Best Practical Environmental OptionHistorically, environmental policies in OECD (BPEO), a principle expressing multi-mediacountries have developed in a largely piecemeal approach and integrated pollution management.way, and did not reflect the complex interactions Integration of environmental policy wasamong the various environmental media until the formalized in many countries by changing1970-80s, when it was discovered that highly legislation, administrative organizations, oracclaimed successes of anti-pollution measures administrative procedures. Environmental legislationdirected to a single medium, such as air or water, has been used to facilitate integration by laying outresulted in the deterioration of another medium. basic definitions and procedures applicable to allFor example, successful clean-up of water through media. This approach has been most effective whenstrict controls of end-of-pipe emissions often a single law existed for all media. In other cases,resulted in groundwater contamination from the administrative (re)organization has been used to makehighly toxic wastes resulting from such control. In officials consider all media when contemplating anthe same way, problems with landfills sometimes action. Various administrative procedures, such asled to the increased use of incineration, resulting in environmental impact assessment and integratedthe deterioration of air quality. In yet other cases, permitting, have also facilitated the integration ofenvironmental problems were transferred across environmental management by requiring that allgeographical regions. Higher smokestacks to impacts of a policy or project be considered in andisperse sulfur dioxide emissions, for example, integrated manner, regardless of medium or sectorimproved the air quality in the immediate area of (see Organizational Structure of Environmentalthe pollution source, but transferred harmful Agencies in Chapter 3).environmental effects to distant locations. In theU.S., for example, water quality deterioration due to Consensus Buildingagricultural run-off, and soil erosion due togovernment-supported agricultural exports have Environmental policy making is a highly politicalbeen attributed to the lack of coordination among process. It represents a comprehensive approach tosector policies (Howe, 1993). certain environmental problems, balancing the goals

The piecemeal, media-oriented approach to of economic development and environmentalregulation also turned out to add significantly to protection, and considering distributional andproduction costs. When regulators imposed stricter macro-economic effects. Most importantly,standards on one medium without giving sufficient environmental poLicies must be implemented at theattention to their effects on other media, firms micro level. The acceptance of and compliance withresponded by adding multiple, uncoordinated, anti- environmental policies depend on the extent to



Box 3. Integrated Environmental Policy in the NetherlandsSeveral different approaches to cross-media and cross-sectoral integration of pollution abatement policies have beenpursued by the Dutch government since the early 1980s. First, policies were developed for environmental "themes,"such as acidification and eutrophication, in order to analyze the cross-media routing of various pollutants. Severalyears later, policies, oriented towards 'target groups" of major polluters, such as refineries, were introduced. Thecurrent planning approach is the culmination of these earlier attempts for the establishment of integrated environ-mental management.Currently, priorities for environmental policy in the Netherlands are set through the national environmental plan-ning process. The Ministry of Housing, Physical Planning and the Environment releases a National Plan every fouryears. The first of these, the National Environmental Policy Plan (NEPP), was adopted in 1989. To complement theNational Plans, Environmental Programs are issued each year to record the progress the central government hasmade in attaining environmental objectives of he plans. The basic targets set under the NEPP will be maintainedunder the updated versions of the plan, though new operational goals and additional priorities or criteria forpriorities may be required where the NEP has not proved effective.

This environmental planning process creates a framework of recommended actions that have emerged from struc-tured planning process vetted by experts. All parts of the government which are involved in environmental issuesuse this framework as the basis for setting their priorities, but must ultimately respond to the political concerns andinterests of their constituencies and their overall mandates.The Dutch government is relatively well prepared to undertake these new environmental planning activities since ithas a long history of planning, and has been a strong participant in the economy through its quasi-governmentalcompanies.Although many of the goals of the Plans are quite strict, it has not been too difficult to gain political support forthem. A goal of planning is to involve outside participants in tlhe process: national funds are allocated to encourageenvironmental planning within the provincial and municipal governments, and the business community is invited tohelp developing the plans with the intention that individual companies will increase their participation byimplementing environmentally friendly practices early on.

which lower levels of governments, industries, and particular decision. However, effectiveother regulated entities perceive such goals and environmental regulation requires both technicalobjectives of environmental policies feasible and fair, information and analysis, much of which requiresThe consensus among a large range of stakeholders, skills and information that are found mainly amongtherefore, affects the ultimate success of people with a vested interest in the policy outcome.environmental policies. The openness that facilitates public pressure may

Consensus building mechanisms are dependent inhibit the free exchange of such confidentialon the traditional political decision making style of a information. Additionally, the fact that everyonecountry. 2 In a country whose political traditions are reserves the right to litigate eliminates any pressuredistrustful of the government, society may require a to forge a consensus.relatively open system of decision-making in which In contrast, in a country where a ruling elite is, bythe public is permitted and encouraged to tradition, given wide latitude and discretion inparticipate. In the U.S., the archetype of such policy-making, a closed style of decision-makingtraditions, adversarial procedures are built into the may be accepted with a relatively small group offormal policy formulation. Consultations between interested parties hammering out a consensusgovernment officials and parties are carefully among themselves and presenting it to the public asregulated and most discussions are expected to take a fait accompli. In several countries in Europe (forplace in public forums. Public forums assure that no example, the U.K, France and Germany) and ininterested party has special access to information, Japan, negotiations between the environmentaland encourage posturing by both environmentalists agency and regulated entities before governmentand industry. NGOs and scientists outside the decision making have remained largely private. It isregulatory bureaucracies are integral parts of the considered as part of the function of an intelligentsystem, and regard themselves as acting in the civil servant to learn the point of view of those whopublic interest as independent checks and counter- will be affected by government policies, and toweights to the more parochial or politically represent this viewpoint in the course of internalconstrained interests of the regulatory government discussions. Since these consultationsbureaucracies, and the parties directly affected by a are private, participants can be frank, direct and



open, and can, in principle, work out a solution that many of them, prompting efforts to reduce theirboth works toward government objectives to protect numbers in order to reduce the burden on thethe enviromnent and allows industry to make the citizenry. Special characteristics of the Swedishnecessary adjustments without undue cost or society - its relatively small size and homogeneousinconvenience. Mutually agreed policies, then, are nature, as well as the strong pro-active involvementhanded over to a politically neutral bureaucracy for of technical people in environmental measures -

straightforward implementation and enforcement, have supported the Swedish "model".with little or no judicial review. Consultations alsoprovide industry with ample notice of the new Public Access to Information andrequirements, so that by the time a regulation is Participation in Decisionspublished, the great majority of those affected arefrequently already in compliance. This greatly The public has a right to expect that environmentalsimplifies the problems of enforcement against the policy makers will act according to publiclyremaining violators, who are relatively few in expressed environmental objectives, andnumber. The closed style of decision making has government officials will be competent and wellworked reasonably well, maiinly because civil trained to implement policies. However, there is aservants are trusted by the public to be skilled and need for a public counterweight to the manyresponsible, and to behave in a professional manner. economic and political interests influencingEnvironmental activists, however, have often environmental decision making through some formcriticized the lack of transparency in closed decision- of pro-environmental pressure based on citizenmaking. access to the system.

The two different styles of political decision One of the means of allowing the public tomaking and interest representation are often influence environmental policy is the regular releasereferred to as corporatist and pluralist. Corporatism of systematic information concerning theis defined as institutionalized consensual policy environment. However, such information is onlymaking by a small number of strategic actors valuable to the general public if it is analyzed,representing larger parts of the population. The interpreted, and presented in a way understandableforinteraction between the strategic actors is non-professionals. According to Viscusi (1996), theconsensual, cooperative and goal oriented. In public has a tendency to over-estimate risks thatcontrast, pluralism is process oriented and have received substantial media attention even ifadversarial, characterized by a large number of such risks have low probabilities. Complex andvoluntary groups of a wide range of interests scientifically not fully researched issues may be niis-competing for access to government decision makers interpreted or presented in a simplified andand the legislative process to influence public policy misleading way by the media, causing(Hatch, 1995 and Crepaz, 1995). Although it is "environmental crisis" situations that politicians aredifficult to define exact measurements to compare expected and pressured to solve promptly. Suchthe effectiveness of these policy making styles across situations, as Hourcade et al (1992) pointed out, maycountries, such attempts have been made. Crepaz lead to premature, exaggerated or misdirected(1995), for example, used statistical analysis to policy responses that could irreversibly determinedemonstrate that corporatist policy making (for the future path of certain economic sectors (Box 4).example, in Germany) results in lower emissions of The media have played a role in heightening publictraditional air pollutants than pluralist interest anxiety and exaggerating the danger of chemicalrepresentation (for example, in the U.S). contamination in the Love Canal incident in New

The Swedish system appears to have achieved a York that resulted in the evacuation of nearly 1,000middle ground between the above two patterns. families from the neighborhood of the formerDrawing on the long Swedish tradition of "open chemical plant site. As Wildavsky (1995) showed,policy consensus, openly arrived at", the Swedish moving those that did not have high levels ofgovernment develops new major policies through a chemicals measured in their homes was done in thesystem of royal commissions, broadly based absence of any scientific evidence for the risk ofadvisory bodies which ensure that the basic facts serious health damage. In fact, when such a studybearing on a policy decision are widely known and was later done, the results were negative.that major alternatives are widely discussed in all Among OECD countries, the level of publicparts of the country. Indeed, the major problem access to environmental information has beenwith the commissions has been that there are too traditionally uneven. The U.S. has an open system of



Box 4. Public Pressure and Policy Response to Forest Dieback in GermanyEven though concerns about transboundary pollution started to emerge world-wide in the 1970s, direct links be-tween acid rain and forest deaths were not made until the early 1980s when two German scientists suggested thatsuch links existed. A crisis evolved during 1982-83 in Germany wlLen this information was widely publicized in themedia. Public concern increased suddenly as reflected in the agenda of the "green party" in the political arena.

To prevent the further exasperation of the crisis, the government was quick to adopt strict emission standards forthermal power plants in 1993, and vehicles in 1984. The new standards for thermal power plants resulted in anemission desulfurization program witlh a cost of 12 billion dollars over 5 years. The regulation of vehicle emissionswas largely aimed at combating tlhe emissions of nitrogen oxides and volatile organic compounds by requiring theuse of catalytic converters.

Hourcade et al (1992) pointed out that the scientific foundation of tlhe exact causes and mechanism of forest diebackwas not available at the time of government decisions. In fact, several alternative scientific hypotheses existed, eachimplying different pollution abatement strategies. If, for example, soil acidity was the main cause of forest damagebut only above a certain threshold, the abatement of sulfur emissions from stationary sources would have beensufficient. If, however, a synergy between ozone and the level of soil acidity was responsible without a threshold,the abatement of ozone precursors from transportation should have been tlhe main policy focus. The governmentchose a maximalist approach wlhich determined long-term investment decisions in industry and also influenced theenvironmental policies of other European countries in the framework of the European Union.

public access to environmental information required permission to do so. As Priestman (1996) showed,by the Freedom of Information Act of 1966, which gives Britain's statute books have accumulated at least 200citizens the right to any information in the hands of separate prohibitions, effective in 1990, on thethe federal government, subject only to exceptions public's right to information on aspects of thefor commercial secrets and national security. environment. As a result, prior to the EnvironmentalAdditionally, through individual statutory Protection Act of 1990 and the Environmentalprovisions of sector legislation, industry is also Information Regulations Act of 1992, most informationrequired to disclose certain specific types of held by regulatory agencies about pollution and theinformation, such as the amounts of pollution state of the environment was kept secret in Britainemitted, hazardous substances in use or being (Davis, 1996). In Germany, access to official filesstored, and emergency evacuation plans. Under the was only allowed if someone's rights or personalEmergency Planning and Community Right to Know Act freedom or property were affected by certainof 19863, for example, industries must report major decisions (Davis, 1996). Even in countries such astoxic releases to air, water and land 2 , and provide France, which started to establish mechanisms forinformation on chemicals stored at local industrial public access to information relatively early (thefacilities, emergency response procedures, pollution principle of confidentiality and refusal to provideprevention and control measures, and land use information was abolished in 1978), serious obstaclesplanning, insurance and property transfer issues. and limitations have remained. EnvironmentalAlthough rough data of the toxic substance releases organizations, for example, can participate in publicdo not indicate the relative risks the reported decisions only if, after at least three years ofsubstances impose on human health and ecosystems, operation, they receive a license from the Ministry ofthe obligation to make such information public made Environment, and environmental impact statementspolluters more aware and concerned about pollution have to be published only after a decision is takenand put pressure on company management to more (Davis, 1996). On the other hand, in Scandinaviansystematically improve environmental performance. countries (for example, Sweden and Norway),

Information was closely held by in the past, participation of various interest groups has beenhowever, government officials in many OECD institutionalized in environmental policy makingcountries in Europe, and the public had no right to through advisory boards and committees.access it. An extreme example was the British Traditionally closed decision making patters areOfficial Secrets Act of 1911 which stated that a gradually changing in Europe, largely influenced bypublic official may not, under penalty of prison, European Union directives, specifically the directivedivulge information to the public without specific on Assessment of the Effects of Certain Public and



Box 5. The Use of Referendum in Environmental Decision MakingThe early environmental movements scored some spectacular victories through referenda in the 1970s. In Sweden,for example, a referendum rejected the further development of nuclear power. Local referenda on enviromnentalmatters (such as conservation and the siting of incinerators) are specifically authorized by Swedish law. In Switzer-land, the "Greens" who had seats in the Federal Parliament, easily collected the 100,000 signatures for the federalreferenda on the phase-out of nuclear power. The proposition was narrowly defeated (by 53 percent) but a ten yearbuilding moratorium on nuclear plants received 54 per cent of the vote.The United States does not utilize national referenda as a legislation tool, but some states have institutionalizedpopular initiatives and in some westem states it has become a standard policy-making process. There are cases inwhich an initiative was ultimately found unconstitutional, but in retrospect had a decisive impact on legislation, forexample the legislation on coastal protection and nuclear waste disposal in California. In other cases, referenda haveset the tone for later national environmental legislation, for example, the legislation on energy conservation and onnon-returnable bottles and cans in Michigan and Maine, and clean air in California.

Private Projects on the Environment of 1985, and the to review an environmental impact statement or adirective on The Freedom of Access to Information on voluntary agreement between a polluter and athe Environment of 1990. Many European countries government inspector. In the U.K., many decisionshave been slow, however, in developing a legislative go through a process known as "planning appeals"framework and embracing the idea of broad public which involve public hearing.participation in environmental decision making. As * Independent technical advisony committee.Davis (1996) notes, with some exceptions (such as Another device for seeking input from the public -

the Netherlands and Denmark), EU member states albeit a specialized segment of the public - is thehave been reluctant to enact comprehensive legal independent technical advisory committee. Theobligations, and some simply assumed that their purpose of such a committee is to thrash outexisting legislation was sufficient to comply with the disagreements on the technical aspects ofdirectives. He also pointed out that in many controversial issues, and at the same time to allowcountries, the provision of information remained time to pass, and give tempers and politicalpassive, and public participation is still hampered. temperatures a chance to cool. If properly

Several formal procedures may be available for constituted, such a technical advisory committeethe public to influence or participate in should include technical experts representing allenvironmental decision making. However, the role points of view. Its members should be free ofand application of these procedures vary undisclosed conflicts of interest. Such committeessignificantly among countries: are frequently convened in the United States, and to

* Public hearing. The basic device for formal a much lesser extent in Germany, the U.K. and otherpublic involvement in environmental decision- countries, by such bodies as the National Academymaking is the public hearing on proposed changes in of Sciences. The U.K. also has a standing Royallegislation and policy, and on proposed projects that Commission on Environmental Pollution whichwill affect the environment. In the latter case, the considers environmental issues.environmental impact statement plays an important * Referendum. The referendum, or popularrole, since it is a comprehensive statement by the vote on a question or proposed law or policy, haspromoter of the project of its anticipated been an important tool in a few countries forenvironmental effects. Public hearings form an securing the passage of environmental measuresimportant part of environmental decision-making opposed by elected officials, and conversely, forand are built into most procedures for policy- enabling elected officials to "pass the buck" to themaking and project review in the U.S. In Germany, voters concerning issues on which they do not wishpublic hearings are frequently held as part of the to take a stand. Referenda vary greatly in the extentconsideration of new policies and projects. Hearings to which they can substitute for control over law-can be called not only by the Parliament, but also by making by the legislators. Referenda are likely tothe Ministry of the Environnment, other parts of the gain a stronger role in environmental policygovernment, or individual political parties. In the formulation in countries that have traditions of suchNetherlands, public hearings are not a usual part of direct democratic mechanisms (Box 5).the policy-making process, but may be called underspecial circumstances by the Parliament, especially


Envriomnental Policy Making

Box 6. Government-NGO Relationships in the Netherlands

The Dutch govermnent and public have come to recognize the value of tlhe role played by independent, critical NGOsat the vanguard of th-e environmental movement in (i) identifying environmental problems that government andsociety have yet to acknowledge; (ii) spurring action on issues tlhat the Government may ignore; and (iii) being a"consultation partner" on environmental issues to balance tlhe influence of economically oriented constituencies rep-resented by the ministries of industry, agriculture, and energy.

The government regularly consults with the NGO community. Industries also seek comments from NGOs regardingtheir enviromnental policy and, in turn, seek to gain their support througlh public relations programs and visits. Eachside views the other as competent professionals, creating respect and trust to the relationship. The Foundation forNature and the Environment, for example, an umbrella group witlh highly professional staff, is an important sourceof policy documents.

The Dutch Governmelnt subsidizes tlhe core (non-project) budget of some 30-40 environmental NGOs. As a result,only less than half of their budget is derived from nton-governmental sources. Additionally, provincial and munici-pal governments also subsidize locally based NGOs.

Both the government and NGOs insist that govermmental support has not infringed the freedom of the NGOs to takepositions strongly critical of the government on specific environmental issues.

The Role of Non-Government Organizations In Japan, where interest groups are generally notclearly differentiated from political parties, anti-

By objective and style, four broad types of non- pollution groups managed to become moregovernment organizations (NGOs) play a role in the autonomous, and they have been successful inenvironmental policy formulation in OECD halting the construction of new power plants andcountries: (i) traditional organizations oriented other controversial investments (Enloe, 1975).towards the protection of nature and landscape; (ii) NGOs, however, do not have significantly largeactivist organizations involved in lobbying and membership, financial resources or legal standing incommunity organization; (iii) technical groups courts in Japan (OECD, 1994b).which carry out policy analysis and develop In Europe, consultations often occur at theenvironmentally friendly technologies; and (iv) initiative of the government. Therefore, the firstradical groups which aim to change life-styles. objective of an outsider who wants to influenceEnvironmental NGOs may be locally or nationally governmental actions, including NGOs concemedbased, or may be branches of multinational NGOs, with the environment, is to get inside and becomesuch as Friends of the Earth, Greenpeace and Worldwide one of those regularly consulted. In England, forFundfor Nature. Within countries, NGOs may form example, heritage trusts and other local voluntarycoalitions such as the Dutch umbrella organization, organizations established to protect landscape,Foundation for Nature and the Environment and the recreational values and heritage (often protestingGreen Alliance in the U.K. Increasingly, trade against the government's land use and developmentorganizations, academic institutions, unions and plans) have become "converted to insiders" who arechurch groups are also active on environmental formally consulted by local planning authoritiesissues and want to be seen as members of the family (Davis, 1996).of environmental NGOs. The tradition of voluntary philanthropy is much

The role of NGOs varies widely from country to weaker in Europe than in the U.S., and NGOs arecountry. The NGO community in the U.S. consists often dependent on the financial support ofof numerous broadly differentiated, overlapping governments. In the Netherlands, for example,organizations, many with highly professional staff. where NGOs are consultative partners, their role asThe tradition of citizen participation in these political counterweight is valued to such an extentorganizations is strong, and large memberships give that the government provides significant support toclout to NGOs who can claim to represent the dozens of NGOs (Box 6). In other countries, it isconcerns of a large number of people. Most funding common for the government to provide support tofor U.S. environmental organizations comes from NGOs for work on a particular project, such asprivate donations, either directly through conferences, research projects, or public educationmembership contributions or indirectly through campaigns. In the U.K., there has been closegrants and other moneys provided by foundations collaboration between government and specificwhich are, in turn, financed privately.



NGOs on issues such as stratospheric ozone to certain environmental problems. Some NGOsdepletion and waste recycling. deliberately maintain an adversarial relationship

Under some statutes, U.S. NGOs can obtain with the government, dramatizing their opposition

standing to bring class action suits in U.S. courts. As by civil disobedience, or pressing exaggerated

a result, some U.S. NGOs spend more time on claims and showing hysterical reactions to certainlitigation than their European counterparts, that environmental problems.commonly do not have such rights. In order to usethe court system for environmental causes, NGOs Policy Implementation Approaches andmust find individuals who suffered direct harm and Instrumentsare willing to go to court in order to bring legalaction. It is generally difficult for NGOs to bring Environmental policy making involves two stronglysuits against polluters, since individual plaintiffs inter-related processes: the determination offace immense pressure to back down, and the legal objectives; and the selection of policyfees often exceed the capabilities of NGOs. In the implementation instruments. As Hahn and StavinsU.K., for example, the loser of litigation is required (1991) pointed out, however, these two processes doto pay the legal costs of both parties. not necessarily follow each other in a distinct order.

NGOs are an important channel for grass-roots The choice of instruments frequently influences thepublic pressure on government. NGOs, with their distribution of costs, risks and benefits, and,ability to raise public support, can be valuable allies therefore, the support of various interest groups andof the environmental agencies, counterbalancing the constituencies. The choice of policy instruments isinfluence of sectoral ministries with powerful as much influenced by a variety of political andconstituencies and large budgets. Indeed, economic interests as the determination ofenvironmental policies and agencies in many environmental objectives.countries were established precisely in response to A range of policy implementation instrumentssuch popular pressure. NGOs can also assist are available from strictly command and controlenvironmental authorities to identify issues early (CAC) to purely market based (for details, see:and analyze them independently without Eskeland and Jimenez, 1991). The basic philosophy

commitment to any particular economic or political of the CAC approach holds that governmentsinterest (although the latter is not always true). should determine the rules to be followed byTheir technical expertise may be equal to or even individual polluters. These rules are expressed asexceed that of the governmrrent. In some cases, grass- explicit orders that control which technologies orroot environmental pressure is augmented by the processes are to be used to attain complianceinfluence of neighboring countries, important (technology stadards), the permissible content andtrading partners, or multilateral negotiations. In concentration of emissions discharge (emissionsthis, too, domestic NGOs can be an important link standards), or when and where activities can takewith these sources of external pressure, opening place (permitting and zoning). The requirements oflines of communication that channel the external CAC schemes are relatively clear-cut, and theirinfluences into constructive paths. This is true results are consistent and predictable.despite the fact that their independence, their chosen Many economists have criticized the command-roles as gadflies, and the tactics they use in order to and-control approach, however, as conceptuallymobilize public opinion, make them somewhat unsound and difficult to administer because (i)inconvenient associates. government involvement in micro-management

There is often good reason, however, for an arm's makes the system wasteful; (ii) the need forlength relation between the government and NGOs. excessive regulation and over-involvement ofNGOs are often burdened by their needs for fund- bureaucracy makes it cumbersome; (iii) it ignoresraising and membership, and the career ambitions of costs; (iv) it encourages rent-seeking; and (v) ittheir officials that may distort their priorities and discourages innovation. These critics havetactics, making them difficult partners for advocated a variety of economic incentive schemesgovermnents. NGOs frequently focus only on a which are supported by a large body of theoreticallimited set of issues for which they are trying to gain literature.political support. As a result, there are often Economic instruments rely on the market tolegitimate differences of views between the induce the attainment of satisfactory environnmentalgovernment and NGOs over the priority to be given quality. Under economic incentive systems,



polluters have significant control over decisions example, for all new electric generators, whileabout how much to pollute versus how much to nationally uniform effluent standards were set basedabate, based on their knowledge of output prices on BAT requirements for all major water pollutionand production costs which are altered by policy sources. In Germany, the Technical Instructions onintervention to reflect the social costs of pollution Air Quality Control set BAT requirements andand other economic activities. Firms with relatively emission limits to specific industries for a greatlow marginal costs of pollution abatement will, in number of pollutants grouped into three categoriesprinciple, reduce emissions beyond the level that by toxicity, persistence, bio-accumulation potentialwould have been required under CAC approaches. and carcinogencity (OECD, 1993). Dutch policyPolluters facing high control costs, on the other makers distinguish pollutants by their toxicity andhand, will choose to abate less and pay taxes or require the application of "best technical means" inpurchase pollution permits. The competitive market case of highly toxic substances, and "best practicableencourages innovation in pollution abatement means" for other toxic pollutants, while ambienttechnologies and techniques, so that industry, rather quality objectives determine the requirements forthan government, takes on the task of searching out controlling other pollutants. British policy makerseffective, low-cost methods to attain reduction considered not only technical feasibility, but also thelevels. Polluters are also encouraged to continue cost-effectiveness of compliance when adopting, inreducing pollution, as long as it is cost-effective to the Environmental Protection Act of 1990, thedo so. In theory, economic incentives promise to concept of Best Available Technology not Entailingdeliver the same or better level of environmental Excess Cost (BATNEEC) (Box 8) recommended inquality as CAC systems, but with significant savings the Conservative Government's White Paper on thein cost, gains in efficiency, and reductions in Environment; and the principle of Best Practicalgovernment involvement. Environmental Option (BPEO) that emphasizes the

Critics of the market-based policy approach point cost effectiveness of measures in achieving environ-out, however, that while economic incentives have mental objectives across all environmental media.great theoretical promise, this has not yet been borne The cost element in these policy approaches, how-out by practical experience, and conflicting interests ever, remained only implicit, leaving significantand goals will necessarily move the actual policy room for case-by-case analyses and the discretion ofperformance of an economic incentive scheme away the regulator.from theoretical ideals. They also point out the need Heavy reliance on direct regulations and technol-for certain policing activities and administrative ogy-based policy approaches has been reasonablycontrol. effective in achieving environmental improvements,

In practice, command-and-control approaches but often resulted in wasteful use of resources.have dominated in OECD countries, relying prima- Uniform water effluent standards in the U.S., forrily on various versions of strictly technology-based, example, have imposed significant financial burdenand largely uniform standards. U.S. legislators, for on the states and municipalities, requiring theexample, have endorsed and supported the notion construction of waste-water treatmnent facilitiesthat Best Available Technology (BAT) should be without taking into account the cost-effectiveness ofapplied by polluters to curb environmentally harm- such investments to improve water quality; ignoringful emissions. BAT requirements have been explicit regional differences; and over-emphasizing invest-in some cases and implicit in others (Box 7). Spe- ments as opposed to maintenance. Some analystscific abatement technologies were mandated, for (cited by Howe, 1993) estimated the difference

Box 7. Illustration of Technology Requirements in U.S. Environmental Legislation"Best system of continuous emission reduction ...adequately demonstrated" (Clean Air Act, section 111);"Lowest achievable emission rate" (Clean Air Act., section 173);"Greatest degree of emission reduction achievable thorough application of technology which the Administratordetermines will be available..." (Clean Air Act, section 202);"Best demonstrated available technology" (Resource Conservation and Recovery Act);"Best practicable control technology currently available" (Clean Water Act, section 301);"secondary [wastewater] treatment as defined by the Administrator" (Clean Water Act, section 301)'"Best available technology ..[that is] feasible" (Noise Control Act, section 6); and

"Best technology...available" (Safe Drinking Water Act, section 1412).



between actual and theoretically minimum air Environmental groups and NGOs frequentlyquality control costs four to 14-fold in certain cases opposed economic instruments because they werein the U.S. uncertain that these instruments could achieve the

Regulations have focused excessively on end-of- same environmental improvements as CACpipe control measures, discouraging process instruments. The technology-based approach haschanges, the reduction of waste and other preven- also been facilitated by the professional profile oftive measures, and the invention of alternative enviromnental staff, which was typically dominatedpollution abatement technologies. Additionally, by technical expertise. Existing administrationsnew sources of pollution and more profitable strongly resisted change due to (i) conceptualindustries have generally been treated differently, disagreements about regulatory approaches; and (ii)distorting economic competition. the perceived threat to certain jobs that might

Frequently, CAC approaches were favored by become obsolete as the mix of necessary skillspoliticians because they offered predictable results, changes. As a result, the application of market-while market based instruments were rejected due based instruments to encourage polluters to weighto the uncertainties connected to their economic costs in decisions to abate remainedimplementation. Once the command-based policy limited.approach became entrenched, it became extremely With increased recognition of both the complexresistant to change. In the U.S., for example, water nature of pollution problems and the need forpollution fees have been rejected because fees were solving environmental problems cost-effectively,(i) viewed as additional taxes; (ii) perceived to however, noticeable change in attitudes towards theprovide the "right to pollute"; (iii) contradictory to use of economic policy instruments has recentlythe perception that only legislative means could taken place in most OECD countries, recognizing theanswer social needs; and (iv) opposed by industries merits of market-based instruments as viable policythat view fees as an additional financial burden options. Additionally, current trends towards(Lovei, 1995). Although states have the legal power deregulation in some countries, budgetaryto introduce effluent charges, their reluctance to do shortages, and the demonstration effects of existingso may have also been influenced by their concerns market-based regulatory programs are expected toabout violating the Constitution's commerce clause encourage the application of economic instruments.that restricts the creation of obstacles to interstate There are differences in the choice of market-coxSuMKihdustries also resisted change due to based policy instruments among OECD countries.concerns about the impacts of such change on their Emission charges and other environmental taxes haveprofit, since it would inevitably result in financial gained larger acceptance in European countries thantransfers among industries, creating winners and in the U.S., where a strong resistance exists againstlosers. Hahn and Stavins (1991) showed that private new taxes. A comparison of the share ofsector lobbyists who learned the rules of the game environmental tax revenues among total taxand gained significant experience in fine-tuning the revenues in OECD countries (Morgenstern, 1996)regulatory system, had been reluctant to allow revealed, for example, that it was lowest in the U.S.changes that would have eliminated the need for (3.24 percent compared to 4.92 percent in France,their expertise.

Box 8. BATNEEC Definitions in the U.K.According to the Environment Protection Act of 1990, HMIP is required to ensure the application of Best AvailableTechniques Not Entailing Excessive Costs (BATNEEC) principle. Since the law itself leaves room for interpretation,the Department of Environment (DOE) provided guidance in the definition of BATNEEC:

. Best means the most effective (set of) techniques to prevent, minimize or render hazardousemissions;

. Available requires procurable and generally accessible teclhiques to the operator of facility;

. Techniques include measures and tecluologies; and imply that technologies have to be not onlyinstalled but also effectively operated; and

. Not Entailing Excessive Costs principle allows for modification of the BAT requirement if its costsare excessive in relation to their effectiveness in achieving environmental objectives or to the capabilities of theindustry.

Source: Adopted from Slater, 1996.

16 Enviromnent Department Papers


5.49 percent in Japan, 6.12 percent in Germany and have also been successfully applied by severalthe Netherlands, 6.34 percent in Sweden, and 8.23 countries to promote the use of more fuel-efficientpercent in the U.K.). and less polluting vehicles, and environmentally less

Emission charges on water effluents have been harmful fuels. The increasing role of environmentalapplied in several countries, including France, taxes requires the adjustment of existing tax sytemGermany and the Netherlands. Experience in the in a revenue neutral way. Several EuropeanNetherlands showed that water pollution fees countries have reformed their whole tax system tocontributed not only to the accumulation of introduce environmental considerations (Box 9).revenues, but also created incentives for polluters to The traditional American support of free marketsreduce emissions (Bressers and Schuddeboom, may have contributed to a larger appeal of tradable1993). In Germany, water effluent charges pernmit schemnes to American policy makers and theircontributed to reduced industrial waste discharges, constituencies than to their European counterparts.even though the level of charges was set too low to In the 1970s, for example, the Clean Air Act allowedachieve desired water objectives through the firms to trade emission permits intemally (withincentive effects alone (Brown and Johnson, 1984). sources at the same plant site) or extemally (withThe use of direct emission charges in air pollution other sites). The trading program has proved moremanagement has been rare, and typically narrowly cost-effective than CAC regulations, primarily duefocused. In France, for example, a charge has been to internal trading activity. The 1990 Amendmentslevied on large polluting installations in proportion to the U.S. Clean Air Act expanded the use ofto the amount of acidifying emissions. marketable permits to deal with regional problems

Environmental charges have been frequently of acid rain (SO2 trading program). The successfulapplied in areas of waste disposal and noise application of this trading program demonstratedabatement. Existing environmental charges, the potential in reducing the costs of emissionhowever, typically tend to sacrifice charge accuracy abatement when such decisions were left to thefor administrative feasibility (Hahn, 1989). The use polluters: the market set the marginal abatementof indirect environmental taxes, especially product cost of SO2 at levels several times lower than the ex-taxes levied on a narrow range of commodities, such ante estimates of polluting industries, power plantsas fertilizers, pesticides, and rubber tires, has been or the U.S. EPA5.more acceptable politically in many countries thandirect emission taxes. Tax differentiation policies

Box 9. Increasing Role of Fiscal Instruments in Environmental Policy in OECD Countries

A recent OECD survey (OECD, 1995a) found that the role of environmental taxes has been growing in OECDcountries both politically and economically. Another trend has been the growing emphasis on the incentive effectsof environmental taxes.

The use of product charges and the taxation of transport and energy according to environmental impacts areincreasing in most reviewed countries. Examples are:

. Carbon tax that has been recently introduced in Denmark, Finland, the Netherlands, Norway and Sweden;

. Fertilizer taxes that are levied, for example, in Austria, Finland, Norway and Sweden;

. Taxes on packaging materials and disposable goods levied, for example, in Belgium, Denmark, Norway,Sweden;

. Fuel tax differentiation to promote the use of unleaded gasoline, for example, in France, Germany,Netherlands, U.K.; and

* Vehicle tax differentiation to promote the use of catalytic converters, for example, in Germany, Austria,Norway, Finland.

Furthermore, in Denmark, the Netherlands, Norway and Sweden, a major restructuring of the tax system took placeas part of a tax reform aiming to replace traditional taxes with "environmental taxes". During the Swedish taxreform in 1991, for example, the level of general fuel taxes was reduced by 50 percent parallel with the introductionof the CO2 and sulfur taxes in order to achieve a substitution effect towards low carbon and sulfur content fuels,while compensating energy users for the new taxes (OECD, 1994a).



A number of countries have used various types taxes on inputs and materials as well as on finalof temporany subsidies in an effort to induce polluters products. Input taxes may be effective if theto make investments needed to bring them into pollution potential of production inputs andcompliance with environmental regulations. The materials can be easily and uniformly estimated.temporary nature of subsidies was believed to have Taxes on final products may influence consumera positive impact on the timing of pollution demand (for example, when substitutes areabatement investments. Besides environmental available).considerations, however, incentive policies have Although it is likely that environmental policiesoften been combined with the promotion of can be implemented most effectively by aindustrial competitiveness, employment, and combination of various environmental policytechnological progress. Subsidy programs have instruments under an overall policy regime thattaken the form of grants, soft loans, or various types allows each approach to achieve its goals mostof tax incentives, such as accelerated depreciation, efficiently, finding the optimal mix of instruments istax reduction, or the allowance of tax deductible a task yet to be solved by policy makers andfunds (Lovei, 1995). Of these forms, tax incentives legislators. Some environmental problems are moreapplied primarily for the purchase of pollution suitable to be regulated by economic instrumentscontrol equipment have been the favored form of than others. On one hand, transboundary and globalsubsidies in most OECD countries. The bias of such pollution problems may be well suited to be tackledprograms towards end-of-pipe control, however, by emission trading. On the other hand, some typesmay have prevented alternative pollution abatement of pollution, such as the emission of heavy metalsmeasures, and distorted price signals. Only and other highly toxic elements which are very hardGermany and Japan have set up special national to monitor and measure, are not very likelycredit mechanisms directed to environmental candidates for market-based regulation. Similarly,financing (Lovei, 1995). there are limits to the use of economic instruments

Besides economic rationale and political for the regulation of non-uniformly mixed pollutantsacceptance, administrative costs and feasibility of with known thresholds of health impacts or not wellcertain policy implementation instruments are also understood impacts. As Hahn and Stavins (1991)important. Although direct emission charges create pointed out, emerging environmental issues are alsothe closest link between the damage caused to better candidates for new approaches than alreadyhuman health and the penalty imposed on polluters, regulated ones with entrenched interests andadministrative consideratilons often favor indirect constituencies that resist change.



The Scientific Advisory Board (SAB) is a group of 60 full-time scientists, engineers and other experts and approxi-mately 250 outside consultants charged with providing executive advice to the U.S. EPA on scientific issues.

2 The traditional political decision making style in a country influences not only the way environmental policies are made,but also regulatory and enforcement mechanisms (see under The Administrative Control of Environmental Agencies in Chap-ter 3).

Also known as Title III of the Superfund Amendments.

The list of more than 300 chemicals and chemical categories included in the Toxic Releases Inventory (TRI) is continu-ously reviewed by the U.S. EPA.

S Before the passage of Clean Air Act amendments in 1990, estimates of marginal emission costs were as high as $1,500per ton. By the end of 1995, the price of allowances traded privately fell to $100. The price of 1995 allowances in theU.S. EPA auction administered by the Chicago Board of Trade ranged from $122 to $144 per ton (Burtraw, 1996).



20 Enviromnent Department Papers

2 Legal and Regulatory Framework

The legal and regulatory framework provides means environmental protection principles that may formto implement environmental policies. The legal the basis for the development of environmentalframework of environmental management, however, legislation. On the one hand, constitutional rightsincludes not only environmental legislation but also combined with the right to petition the courts onthe broader system of governance that determines environmental matters, can provide a means forthe distribution of political and administrative citizens to gain redress for damages suffered fromauthorities, as well as regulatory and enforcement particularly serious environmental harm. On theinstruments. Additionally, social norms, influenced other hand, it is not clear that a constitutionallyby the country's historical and cultural past and recognized environmental right would constitute atraditions, are embodied in the way individuals, directly enforceable individual right against thegroups, and organizations behave in a society. government on environmental matters, as courts areTraditional attitudes towards law and law frequently reluctant to take on policy-makingenforcement, for example, influence the effectiveness responsibilities. Additionally, such approach isof environmental legislation in the implementation likely to be less effective and feasible to provideof environmental policy. Some societies are more rights to citizens to protect the environment thanrule-conscious than others, and rules are not always other measures, for example, putting publiclegal rules; frequently, they are based on customs participation mechanisms into administrativeand moral tradition. As a result, several systems of processes.law (customary, common or statutory) may exist at Efforts to extend human rights laws to includethe same time and the effectiveness of each is the notion of environmental rights have not beeninfluenced by the other. Traditionally developed especially fruitful. Attempts in the United States inpolitical and social norms also endogenously change the early 1970s to recognize a federal constitutionaland adapt in response to social, cultural changes and right to environmental quality based on a dueeconomic development. process were rejected by the courts on the grounds

that they did not wish to "be saddled with ultimateEnvironmental Legislation responsibility for deciding what portion of society's

resources would be devoted to environmentalEnvironmental legislation should facilitate the quality" (Stewart, 1977). Efforts to include the rightintegration of environment and development to environment into the European Convention onpolicies, and provide a framework and means for Human Riglhts did not succeed, either.the implementation and enforcement of The legal framework of environmental regulationenvironmental policies. The legal framework within evolved from sporadic laws and regulationswhich the legislation of environmental protection addressing environmental issues connected todevelops is usually laid down by the constitution'. economic sectors or to various environmental mediaThe constitution determines the distribution of (Table 1). In each of the reviewed countries,political authority and power, and provides legislation dealing with various environmental

Pollution Management Series Page 21


matters including water, air and noise pollution has Table 1 Examples of Environmental Legislation inbeen decades or even centuries old. The earliest the U.K.pollution-related laws were nuisance laws thatprotected people and property from unreasonable 1853 Smoke Nuisance Abatement (Metropolis) Actinterference from the activities of others. The 1863 Alkali Actprimary objective of such laws was to regulate the 1876 Rivers Pollution Prevention Actmanagement of a given sector rather than consider 1906 Alkali and Works Regulation Actthem as part of an overall framework of 1947 Town and Country Planning Actenvironmental protection. 1955 Rural Water Supplies and Sewage Act

The dispersion of environmental functions among 1956 Clean Air Actvarious sectors and media agencies reinforced the 1958 Litter Actpiecemeal approach, reassigning environment- 1960 Radioactive Substanices Actrelated authorities and functions to the regulated 1961 Rivers (Prevention of Pollution) Actsector or media. As a result, the regulation of 1968 Countryside Actenvironmental protection through sectoral 1969 Creation of the Royal Commission onlegislation was often incomplete, and the dispersion Environmental Pollutionof environmental regulation among sectors and 1970 Creation of tlhe Department of Enviromnentmedia at this early stage may have resulted in 1973 Water Actoverlaps and potential contradictions in 1974 Control of Pollution Actadministrative responsibilities. Such a piecemeal 1986 Food and Environment Protection Actapproach was also incapalble of integrating 1987 Creation of Her Majesty's Inspectorate of Pollutionregulation across sectors and media. 1989 Water Act

The success of environimental legislation depend 1990 Environmental Protection Acton: 1991 Water Industry Act

* How well environmental legislation reflects 1993 Radioactive Substances Actenvironmental priorities; Surce: OECD, 1994b; Garner, 1996.

* How compatible environmental legislation iswith existing legislation and the general legalsystem; for each chemical was unrealistic and, as a result, the

a How compatible it is with the existing U.S. EPA could only issue testing rules for a fractionadministrative and institutional framework; and of chemicals in commerce. A discrepancy between

- How feasible its implementation and the requirements of the law and the capabilities ofenforcement are. the administrative system may stem from the lack of

The gap between environmental policy objectives knowledge on the legislative side of the feasibility ofand results on the ground can be often traced back implementation. Such discrepancies are more likelyto weaknesses in environmental legislation: a to occur in the adversarial regulatory framework ofpiecemeal regulatory approach based on ad hoc the U.S. than in the European and Japanese practice,problems and influenced by short-term political where negotiations and consensus building ensuresinterests leading to the failure to set clear priorities; the implementability of policies before legislationthe disregard of the capabilities of the executive takes place.agencies by the legislators resulting in overly bur-densome implementation requirements; and the Distribution of Political and Administrativefailure of legislation to provide the implementing Authorityagencies with adequate incentives and clearlydefined and measurable objectives of performance The appropriate level of government to deal with anleading to power maximizing behavior and reluc- environmental problem is the one which is most abletance and resistance to implementation (Helm, to define environmental priority problems and find1993). cost-effective solutions. Since the effects of many

Legislators in the U.S. have frequently imposed environmental problems are primarily local, theburdensome requirements on federal agencies and decentralization of certain environmental policytheir regulated organs that they were incapable of decisions would be justified. Such decentralizationfulfilling. Portney (1993) showed, for example, that would lead to differences in environmental qualitythe requirement established by the Toxic Substances across regions due to differences in populationControl Act for separate testing rules to be applicable densities, the composition of industries and,

Page 22 Environment Department Papers

Legal and Regulatory Framework

consequently, marginal abatement costs. Non- responsibility of states, was gradually centralized touniform environmental regulation across regions the federal level during the 1970s.may not be politically acceptable, however, if it is In unitary systems, regional and localperceived to hinder commercial and business governments are subject to the sovereignty of therelationships, or contradicts national policies and central government. The division of responsibilityprinciples of social equity and fairness. for formulating, implementing and enforcing

Additionally, the optimal size of administrative environmental policy is strongly influenced byjurisdiction over a particular environmental issue general attitudes and traditions regarding thealso depends on the nature of environmental centralization or decentralization of politicalproblem. Although most pollution problems are authority. In a highly centralized system like theprimarily local, some have larger impacts. In French, local activities are closely controlled by thepractice, administrative jurisdictions do not always national government, although they may becorrespond to the environmentally optimal ones. geographically "deconcentrated" into regions andFor example, water-sheds or air-sheds may occupy counties. In a traditionally decentralized system likethe territories of several political-administrative the Dutch, provincial authorities are allowedjurisdictions, presenting problems to substantial leeway to adapt national guidelines todecentralization. Some environmental problems local conditions. In Japan, air quality standards (formay also expand beyond national borders, solutions five typical air pollutants) and maximum tolerableto which require intemational cooperation. The emission amounts for given areas are set nationally,central government, therefore, typically retains an however, prefectural and local governments canimportant role in environmental policy making. issue ordinances with more stringent limits.

The extent of decentralization is also determined While environmental policies are typically setby the political system. Federal countries are nationally, the implementation and enforcement ofdecentralized by definition, with many functions policies are usually delegated to lower levels ofdelegated to state level. The constitution determines administrations, or decentralized or deconcentratedthe distribution of power, delegation of authority through representatives of offices of the nationaland the policy responsibilities among various levels agency. In the federal system of Germany, theof governments. In strong federations, states may states implement federal regulations and handle thehave only those powers expressly delegated to them permitting, monitoring and enforcement of federalas, for example, in Germany. In the U.S., the air protection policies. The federal governmentdivision of jurisdiction between state and federal determines the framework for water management,authorities is not always well defined and has been leaving detailed water quality regulations andat times source of considerable debate and litigation. responsibility for implementation and enforcementOnce the division of jurisdiction between the federal to the states. In the U.S., states prepare stateand state levels has been determined, governments implementation plans for U.S. EPA review. Onceon each level function independently; that is, state such a plan is approved, the state is responsible forgovermments are legally sovereign regarding the enforcing it, and has the authority to grant delaysfunctions assigned to them. In general, broad (called "variances") to polluters within itsenvironmental policy is a federal matter, although jurisdiction. Permits for water pollution dischargestates are sometimes authorized to impose stricter are granted by the states or by the local U.S. EPAstandards than federal laws and/or regulations to offices based on nationally established effluentprotect the environment. In the U.S., states are standards for each industry over and above theallowed to enact stricter than federal air quality standards of ambient water quality. In astandards, in Germany they are not. However, the decentralized system like the Swedish,division of regulatory powers among government municipalities have an important role andlevels may vary by environmental media. In responsibility in implementing environmentalGermany, for example, air quality objectives are policies based on the historically developed conceptdetermined at the federal level, while water qaulity of municipal self-rule. In the Netherlands, theobjectives at the state level. Additionally, the provinces are responsible for permitting. Thedetailed distribution of responsibilities among the provinces are responsible for enforcement at largevarious government levels may undergo changes installations, the municipalities at smaller ones. Ineven within the same country. In the U.S., for the U.K., where there was a historically strongexample, water quality regulation, previously the resistance to set nationwide environrmental quality


Environmuental Management and Institutions in OECD Countries: Lessons from Experience

objectives (although references to WHO guidelines incinerator plants, and National Inspectorate are allwere used), requirements to comply with EU represented. The siting of large facilities for theregulations led to changes in environmental disposal of urban wastes is typically subject tolegislation to accommodate statutory air and water public review through an environmental impactquality objectives. statement or a permitting process. This process is

Hazardous waste management policies are generally carried out by a lower layer oftypically centralized at the national levels, while government: the county in the U.K., the districtimplementation responsibilities vary among government in Germany, and the province in thecountries. In France, for example, the national Netherlands. In France, the prefectural authoritiesMinistry of the Environrment has the right to grant must authorize waste installations, a public inquirymonopolies to waste disposal companies, and must be held and an EIA prepared beforeapprove installations for the treatment and disposal permission is granted.of hazardous wastes. In the U.S., the regulation of Since national governments delegate varioushazardous wastes is based on a series of measures responsibilities to lower levels of governments inaimed to ensure that companies responsible for both federal and unitary states, coordination andwaste disposal (or of sites of previous waste consultation between the various government levelsdisposal, even those inherited from previous are essential to ensure the commitment andowners) pay the very considerable costs of clean-up. cooperation of lower government levels. InHazardous waste management is overseen by the Germany, for example, consultation between federalfederal government, however, its authority may be and state authorities over the feasibility ofdelegated to the state level. For example, the enforcement of proposed new environmentalSuperfund legislation and the Toxic Substances Control policies and laws is institutionalized in both the civilAct retain virtually all program management service and in the Parliament. Federal officialsresponsibilities at the federal level, while the Federal consult with their state counterparts during theInsecticide, Fungicide and Rodenticide Act grants formulation of new laws and policies, bothprimary enforcement and certification authorities to informally and formally through special councils.the states (but still reserves registration and other Both federal and state governments maintainprogram functions for the U.S. EPA). A federal EIA laboratories and technical services to assistis required for the installation of large facilities such municipalities with the technical, legal and scientificas incinerators. The EIA is prepared, usually aspects of their responsibilities. In the Netherlands,through outside consultants, under the which has a strong commitment to administrativeresponsibility of the federal agency that is the source decentralization, a variety of measures are used toof financial support. Most states require a state EIA ensure that local governments are staffed andif no federal EIA is to be prepared. In Germany, the trained to carry out their enforcementfederal Ministry of the Environment drafts both responsibilities. National subsidies are offered togeneral and detailed regulations for the disposal of local governments to increase their capabilities forhazardous wastes. State governments, then, assign planning and enforcement, and a government fundsites for dumps and treatment facilities. In the supports the majority of the costs of trainingNetherlands, the Ministry of Housing, Spatial programs submitted by municipal and localPlaning and Environment (VROM) is responsible for governments. Both municipal and provincialthe implementation of legislation. governments are organized into associations which

Urban waste management is normally delegated represent them in dealings with the nationalto local governments acting under the supervision of government ensuring that their roles inthe counties or the states in a federal system. In the environmental matters are not unnecessarilyU.K., for example, each county makes up its own diminished. The Association of Municipalwaste disposal plan, while the district (the unit of Governments also maintains a professional staffmunicipal government) handles the actual collection. which assists municipalities in discharging theirIn Germany, each county prepares a ten-year plan environmental and other responsibilities. Infor waste collection, which is submitted to the state addition, the Netherlands uses the system offor approval. Actual collection is carried out by the environmental covenants to form contracts betweencounty or municipality under the supervision of the the public and private sectors.state government. In the Netherlands, regulations The decentralization of political authority is alsofor the collection of urban wastes are drawn up by influenced by the fiscal system that determines thewaste collection boards, on which municipalities, revenue generating capacity of local authorities. In



principle, the decentralization of policy making Both of these schemes exist in OECD countries. Inshould go hand in hand with the decentralization of the U.S., for example, interstate water commissionsfunding responsibilities, since the costs of policy have been formed by voluntary agreements amongimplementation are best borne where the benefits states with the approval of the federal governmentare expected. Some central revenue allocation is to manage major river basins, such as that of thetypically necessary, however, to support regional/ Delaware River. In Germany, inter-statelocal environmental policy implementation. Central commissions coordinate regulations on major riverintervention may be necessary, for example, to basins, and control the relations between Germanycompensate for the uneven burden imposed across and multilateral regulatory commissions. Examplesregions by uniform environmental regulation. The of independent river basin authorities in therole of central revenue allocation varies across countries reviewed are the River Basin Agencies inreviewed countries. In the U.K., for example, only a France, and authorities like the Tennessee Valleysmall proportion of local authority income is Authority in the United States. In France, the sixgenerated locally, the bulk coming through central river basin agencies, one for each major river basin,government allocations. In Sweden, on the other have both financial and technical authority andhand, the majority of environmental investments expertise to levy pollution fees and water userand recurrent costs are financed by locally generated charges; and use the money to finance investmentrevenues (OECD, 1990). programs to improve water quality and develop

While waste management is most typically regional water resources. The agencies are run byfinanced from local sources, the role of central executive boards and managed by committees whichgovernments is often significant in financing water consist of representatives of local officials, waterquality management. This may be the consequence users, and water polluters. Despite the otherwiseof uniform water quality and pollution control highly centralized system, the degree of effectiverequirements that do not meet the objectives and/or local control in river basin management agencies isfinancial capabilities of local governments. In the considerable.U.S., for example, the Federal Water Pollution Act of1972 established technology-based national The Role of Courtsstandards for all sources of pollution, an objectivethat required the transfer of large federal grants to Under constitutional systems, courts usually havethe states and local governments to ensure the power to review legislative and administrativeimplementation. Such approach was proven to be determinations, whereas in the absence of avery costly and inefficient, however, and federal constitution, the role of the courts may be limited.grants were replaced by State Revolving Fun1ds that The role of courts differ significantly in therequired matching funds from the states and higher European, Japanese and American styles ofcost-recovery. The U.S. example demonstrated that environmental management.local responsibility to recover costs increased the In Europe and Japan, courts do not play aefficiency of public environmental services (Lovei, significant role in environmental enforcement. In1995). Local and regional governments, therefore, most countries, courts do not have the authority toare typically in the best position to provide public review the propriety or constitutionality ofenvironmental services according to local demand, legislation. Even when they do have this power, it isand to set charges for those services based on the rarely used. In Sweden, for example, the Nationallocal population's willingness to pay. In the U.K., Franchise Board, which makes decisions aboutprivate water companies are given revenue-raising environmental permits, has the form and function ofpowers for water supply and sewage treatment an administrative court. However, Swedish courtsservices. do not review policy or legislation. In the

Enviromnental boundaries do not always match Netherlands and the U.K., the role of courts isadministrative boundaries, a fact which may hinder mainly in enforcement against persistent violators,enviromnental management. The most obvious although judicial review of unreasonable decisions ismismatch may occur in the management of water an increasing trend in the U.K. In France andbasins or coastal waters that typically extend over Germany, citizens may go to court to force thethe territories of several local administrations. There abatement of pollution from certain sources. Inare two basic approaches to this problem: voluntary Germany, citizens can also stop a proposed project ifcooperation among existing administrations; or the they are or will be directly affected. As Ormondestablishment of independent river basin authorities. (1991) points out, the easiest way for environmental



groups in Germany to obtiiin standng before management by influencing policy making andadministrative courts is to obtain a piece of land enforcement. Virtually every act of legislator,close to the site of a project and demonstrate policy-maker, regulator, or interested private partydamage. In Japan, whereojecut a ctabhorrence is carried out with an eye to the likely reactionexists for direct conflict, and society is viewed as a should a court review take place, since each stage ofseries of hierarchical relationships with strong environmental policy-making and implementation inserisonal alegiarice,an relanshpefor authority and the U.S. is in principle subject to such actions. Thepersonal allegiances, and respect fratoiynd result is a system in which the issuance of ageneral trust in public servants, the public has been regulation is only an intermediate step in atypically reluctant to take direct action against rolongis multi-sidedmbate step in apolluting industries, and courts have been very prolonged, multi-sided baffle to determine therarely involved in environmental matters. Polite practical effect of the proposed policy or regulation.phrases, mild requests and appeals have been more Such a system places a great emphasis on adherencetypical than demands or political threats (Enloe, to administrative process, precisely drawn criteria1975). However, courts have played a significant and elaborate methods of analysis, to ensure thatrole in a number of "landmark" cases in the past that policy and administrative decisions will stand up toraised public awareness of environmental hazards, the judicial review that is likely to take place.and contributed to the government's commitment to Crihtcs of the open, cumbersome, lengthy, court-take environmental protection seriously (Box 10). dominated system in the U.S. point to the waste of

In the U.S., courts are deeply involved in various ime, money, and human talent that results from theapcsof environmental regulation. They review prolonged litigation typical of the U.S.aspects ofevrrretlrglto.Te eiw environmental management. These drawbacks of

the constitutionality of legislation, interpret its environal mang hee recks inambiguities, and review the clarity and propriety of thraditional policy maksg have been recognized inthe delegation of administrative authority. They the U.S., resulting in a search for less confrontationalalso review the procedures and rationale used by the approaches Regulatory negotiatons ("reg-neg")authorities in drafting environmental regulations. for example, have emerged as an alternative toAdditionally, they and the relevant agencies are traditional procedures to draft proposedactive in enforcement, trying and punishing regulations. Under "reg-neg", negotiators try toviolators. One of the attractive features of the U.S. reach a consensus among representatives of thesystem is its openness to citizen intervention. Due regulator agency and various interest groups. Suchto the easy access to the coturt system enjoyed by consensus-based rulemaking is expected to result in"public interest" groups bringing class action and more implementable policies and reduce litigation.other suits, the American courts exert a critical "Reg-neg" is viewed as a supplement to traditionalinfluence on the system of environmental rule-making regulated by the Administrative

Box 10. "Landmark" Environmental Court Decisions in JapanFour major court decisions have contributed to an increased awareness of pollution problems, and influencednational environmental policy in the early 1970s in Japan:a The Showa Denko Company was found liable for methyl-mercury poisoning called the "Minamata disease",and was ordered to pay 270.2 million yen in damages to 77 of the victims and their families in 1971;. Six petrochemical companies in Yokkaichi were ordered in 1972 to jointly pay 88.2 million yen to the victimsof air pollution causing the so called "Yokkaichi asthma";. The Mitsui Mining and Smelting Company in the Tokyo region was ordered in 1971 to pay 2.3 billion yen incompensation for 489 victims of cadmium poisoning, the so called "Itai-itai disease", caused by dumping cadmium towater used for the irrigation of rice fields; and. The Chisso Corporation was ordered in 1973, after several years of legal struggle, by the district court ofKyushu island to pay 930 million yen in legal fees and compensation to the victims suffering from "Minamata"mercury poisoning.

Of all the legal cases, the last one had the most significant impact on the politics of environmental protection in Japan.The traditional friendly and tiusting relationship between local citizens and businesses was somewhat weakened, andthe role of local public groups and governments grew stronger. The court rulings in these landmark cases also startedto change the way national government approached the relationship of economic development and environmentalissues.

Source: MEIP, 1994.



Procedures Act (Pritzker and Dalton, 1990), and it has individuals and may recommend changes in the law.been increasingly used for environmental regulation Somewhat similar institutions have also beenboth at federal and state levels. established in other Scandinavian countries and in

While solutions are sought to change the Germany. Ministers are subject to inspection by thefundamentally adversarial nature of the U.S. Ombudsman in Norway and Denmark. The Danishenvrionmental regulatory system, changes may be Ombudsman may order competent administrativetaking place on the other side of the Ocean, as well. authorities to start disciplinary proceedings againstAs environmental regulations become more civil servants.stringent, and relations between regulators and There is a very high degree of voluntaryregulated become more open to public view and observance of the Ombudsman's suggestions, eventhus less frank and congenial, the role of courts in though he lacks administrative authority to annulenvironmental management is likely to increase in regulations or to enforce his authority otherwise.many countries where their role has not been strong This is likely to be connected with the fact that thein the past. In Europe, court-based remedies for correspondence to and from the Ombudsman isenvironmental damages appear to be on the rise. subject to daily press scrutiny. A free press is thusThe French Administrative Court, for example, that essential to the effectiveness of the work of thehas long had power to review how reasonable the Ombudsman.actions of government officials are, is beginning toget involved in environmental cases. In the U.K., Supra-National Integration of Environ-there has been a recent trend for enforcement mental Policies and Legislation in thebodies, for example, the National Rivers Authority, European Unionto seek and obtain large exemplary penalties againstpolluters. The European Union (EU) (formerly referred to as

European Community), a regional economicOmbudsman integration of sovereign states, introduced an

additional layer to national policy makingAn Ombudsman is an independent government structures. In some respect, policy making in the EUofficial whose function is to ensure that the rights of resembles policy formulation in federal states, thecitizens are not abused by their government This Council of Ministers representing the federalinstitution may play an important role in dimension. The main objective of the EU is toenvironment protection by addressing government facilitate a unified market and eliminate barriers ofofficials failing to carry out their statutory functions economic cooperation and intra-union trade. Due toproperly. Thus far, however, this potential has been differences in existing national policies, institutionalrealized only to a very limited extent. and legal structures, traditions and economic

The position of Ombudsman was first created in interests, such supra-national integration, however,civil law countries, in which the rights of concerned presents considerable difficulties in building acitizens to petition for relief are typically limited, consensus and establishing legislation accepted byand the public has neither sufficient resources nor all members.information to protect the environment on a regular The EU did not have an explicit environmentalbasis. In other countries, such as the U.S., members policy until 1973, when the Directorate General forof the legislative branch may act as the citizen's Environment was created and the first in a series ofadvocate against governmental abuse. In the 1960s, Action Programs for the Environment wasthe Ombudsman also appeared in common law established. Explicitly, however, environmentaljurisdictions. protection was not established as one of the EU's

In Sweden, where the office has existed since objectives until the adoption of the Single European1809, the Ombudsman is required to investigate all Act in 1986. Early environmental policies of the EUcomplaints against officials, including those that were in many ways similar to those of the earlycome to his attention through the press. Under this national environmental policies: the emphasis wassystem, even judges are subject to the scrutiny of the on the production of technical standards (forOmbudsman and have extended criminal and civil example product standards); the adoption of newlaw liability for their actions. The Swedish environmental legislation rather than the integrationOmbudsman may intervene not only in cases of of environmental considerations into other policiesmistakes and negligence by the administration, but (Haagsma, 1988); and command-and-controlmay also be involved in compensation for instruments dominated.


Envirornmental Management and Institutions in OECD Countries: Lessons from Experience

This approach started to change at the end of the The Commission itself, with its numerous1980s when the priority of prevention and the directorates, may represent varying viewpoints. Theintegration of environmental protection Council of Ministers makes final decisions based onrequirements to all other EU policies were adopted qualified majority vote on most environmentalas guiding principles. The Act of Political Unzion issues2 . Although the role of Parliament was(Maastricht Treaty) of 1992 represents a milestone in increased by the Maastricht Treaty, it is yet to gain aenvironmental policy formulation. Environmental stronger role in environmental decision making.policies of the EU have become increasingly The key legal instruments of environmentalproactive by adopting a stronger integration of policy of the EU are:environmental considerations and objectives into * Directives: The main legal instrument of EUeconomic decision making; new principles of greater policy. Once they are approved by the Council ofpublic involvement and stakeholder participation; a Ministers upon proposals from the Commission,wider application of economic instruments; and their requirements are binding for Member Statesvoluntary approaches in environmental policy through their transfer to national legislation. Theimplementation. Additionally, a shift has taken selection of means and instruments used to achieveplace towards a larger focus on global the requirements of directives, however, are left forenvironmental issues. the Member States;

Interaction between national and EU policy * Regiulatory Acts: Legal documents which mustmaking and legislation has become more be directly implemented by all Member States; andcompLicated and interdependent. On the one hand, . Recommenzdations: Non-binding regulationsnational policies and legislation may serve as a issued by the Commission of the Council.model for the EU. EnvironmentaLLy pro-active The EU's environmental policy formulationcountries often expect and pressure the Commission affects national economic interests and, therefore,to accept their model or adopt strict regulations to involves extensive bargaining among the member"level the playing field". The U.K., for example, states (Box 11). Additionally, several industrialstrongly supported the voluntary Eco-Management interest groups have established mechanisms ofand Audit Scheme (EMAS) that was closer to its direct networking and lobbying. Inter-industryown management-orientecl auditing scheme than to cooperation occurs, and temporary alLiances area stricter mandatory and technical-oriented version formed to lobby for or against certain proposals.advocated by Germany. On the other hand, EU Large industrial firms or groups of firms dominatepolicies and legislation affect national policies. In in this political game, while the interests of smallsome northern European countries where extensive enterprises and industries may remain under-regimes of environmental regulation preceded EU represented due to the high costs involved ininvolvement in regulation, harmonization with the lobbying. Ikwue and Skea (1996) pointed out thatpolicies and procedures of the EU has required the competitive position of industries may influencesubstantial modifications in otherwise satisfactory their resistance to environmental regulations. Theypolicies or procedures. In a few cases (for example, also noted, for example, that monopolies in powerin case of policies concerning the transport of generation can more easily recover the costs of theirhazardous wastes across boundaries), EU rules have environmental investments through bargaining withthreatened to disrupt carefully elaborated domestic authorities, while industries exposed to competitiveregulatory regimes, and have led to extensive markets have more limited chances to do so.negotiations between the EU and the affected As a result of extensive negotiations and bargain-countries regarding implementation. The influence ing, initial regulatory proposals often change drasti-of the Community has also affected the balance cally before they become adopted and, as somebetween the government and the Parliament, and analysts point out, often differ significantly frombetween the central and local governments of textbook solutions (Leveque, 1996a). It has been alsoindividual countries, since it is the national noted (Davis, 1996) that the political rhetoric ofgovernment that must dea]L directly with the Union environmental declarations may not always beparticipating in the negotiations with the Council of reflected in concrete action and EU legislation. AMinisters. discrepancy exists, for example, between objectives

Key players in EU policy making are the and concrete action in strengthening the participa-Commission, the governments of the Member States tion of public in environmental policy and decisionthrough the Council of Ministers, and the Parliament. making where the EU has been following a

minimalist approach.



Box 11 National Interests and Consensus Building in the EU: The Case of Large Combustion PlantsDirective

One of the longest and most controversial regulatory processes in the EU has been associated with measuresdesigned to address emissions from fossil fuel-fired power stations. The Large Combustion Plant Directive (LCPD) wasproposed in 1983, following increasing concerns about the potential damage caused by acid rain on the decline offorests (Box 4). It affected power stations, petroleum refineries and larger industrial installations. German nationalinterests - concern about the German industry's competitiveness due to increasing energy production costsfollowing national legislation to restrict emissions - played a key role in the initiative. As Ikwue and Skea (1996)point out, the German industry that failed to prevent the introduction of strict national regulations, saw the EUenvironmental policy as a means to "level the playing field".

Extensive bargaining followed the initiative witlhin tlhe Council of Milnisters influenced by strong national interests.The initiative was supported by Germany, the Netherlands, and Denmark, and opposed by the U.K., Ireland, Italyand, later, Spain and Portugal. The U.K., tlhe largest sulfur dioxide emitter, which was also reluctant to put asignificant burden on the power sector before the planned privatization, showed the strongest opposition. Acid raincontrols were also perceived as anti-coal measures and, therefore, resisted by the coal industry.

After new members (Spain and Portugal) joined the EU, significant compromises were introduced to the originalproposal accepting non-uniform emission reduction requirementts and multiple implementation stages.Although Britain's Central Electricity Generating Board (CEGB) made a significant voluntary gesture in 1986committing to the retrofit of several power stations, the Governmentt concluded tlhe final phases of EU negotiationswithout consultations with the CEGB, agreeing to emission reductions implying a larger commitment than the powerindustry was willing to take. However, tlhis commitment was still much smaller than the initial proposal.

The LCPD was accepted at the Environment Council in 1988. Several years of negotiations resulted in a directivesignificantly different from the original proposal instead of 60 percent reduction of SO2 emission by 1995, averagereduction requirements amounted to 23 percelnt by 1993, 42 percent by 1998 and 57 percent by 2003 (Ikwue and Skea,1996). In summary, the efforts to export national regulations to otlher member states were strongly resisted.

After issuing directives, the Commission follows influenced by the extent to which the regulationup with a formal communication to governments corresponds to national interests and enjoys nationalinquiring about the state of policy implementation. support. The relatively lax enforcement of wasteThis often leads to an exchange of polite notes that management policies in many member countries, foris, in effect, a process of negotiation. The example, reflects the existence of conflicting interestsnegotiations may be quite prolonged, depending on and a reluctance at the national levels to morethe environmental policies of the government in forcefully intervene. The reluctance and lack ofpower in the country's overall relations with the EU. commitment to seriously increase publicThe ultimate remedy for lack of compliance is a participation in environmental policy and decisionformal complaint, before the European Court of making 'are expressed by the fact that only a fewJustice, against the country. This measure, however, member states implemented national laws andis taken only as a last resort. regulations to fulfill the requirements of the Freedom

As Garner (1996) pointed out, one of the biggest of Access to Environmental Information Directiveobstacles of effective EU environmental policy is the (Davis, 1996). Garner (1996) also found that thedifficulty of enforcement. Individual member states performance in implementing and enforcing EUmay ignore or delay the implementation of EU measures by member states was influenced by suchdirectives, causing uneven performacne among factors as (i) difficulties in incorporating EUcountries. Italy, for example, is considered as a legislation with existing laws; (ii) complexity ofcountry where enforcement remains considerably administrative system; and (iii) level of consultationweak (Leveque, 1996b). Implementation is with stakeholders.



While most modem states have a constitution, Britain is an exception. It relies on a mutual acceptance of precedent, aset of existing laws, and the distribution of political power among the Parliament, Government and the Crown thatevolved over time.

2 Measures falling in the following areas require unanimous agreement in the Council of Ministers: (i) fiscal provisions;(ii) measures affecting town and country planning, land use and the management of water resources; and (iii) measuressignificantly affecting a country's energy sector.


3 Admininistrative and InstitutionalFramework

Evolution of National Environmental regulating approach became insufficient.Protection Agencies In response to the surge of public concern and

increased media coverage of environmental topics,The administrative and institutional framework is an augmented by the attention environmental issuesinherent part of the environmental management had gained in international relations, thesystem. It facilitates and supports the appointment of environmental protection agenciesenvironmental policy making process, and ensures embodied the commitment of the government tothe implementation and enforcement of policies. deal with environmental problems. In mostThe main pillars of environmental administration countries reviewed for this report, nationalare government agencies appointed and authorized environmental agencies were established at the endby elected officials to carry out these tasks. The of the 1960s and the early 1970s. In Germany,administrative framework also entails a web of however, even though the Environmental Agencyformal and informal organizations with established was established to conduct scientific research onrules, communicational and command patterns and environmental issues in 1974, it was not until 1986institutional linkages, such as decision making that the Federal Ministry for Environment, Natureprocesses, distribution of authority, interactions, Protection and Nuclear Safety was set up.patterns of communication with other organizations, Environmental agencies were typically establishedindividuals and groups (Glase, 1973). by transferring responsibilities from existing

Historically, sectoral ministries and government governmental agencies and combining theseagencies were responsible for the regulation and responsibilities with new duties (Table 2).supervision of economic activities and the impacts of The history of the development of institutionssuch activities on people and the environment. In suggests that most institutions are path-dependent,this capacity, sectoral regulatory agencies focused on and their development is evolutionary rather thanthe mitigation of negative impacts caused by the revolutionary (De Capatini and North, 1994). Theeconomic activity they promoted in order to prevent experience of OECD countries with environmentaldisruptions in the regulated activity. In the U.S., for management institutions appears to confirm thisexample, the dumping of waste into rivers was view. Setting up a national environmental agency,regulated from the end of the 19th century to for example, -has not been sufficient to ensure thatfacilitate navigation. Such sectoral self-regulation environmental concerns are taken seriously withinrelied on the availability of information about the the government. The newly establisheddamage; the knowledge of costs and means of environmental protection agencies have frequentlymitigation; and the authority of the sector agency to lacked real power to oversee the implementation ofregulate and intervene if necessary. Environmental environmental policies. There were two mainprotection was, however, subordinated to the reasons for this: the lack of real politicalprimary objectives of sector agencies. With commitment to implement changes; and theincreasing government commitment to tackle resistance of existing institutional, legal andenvironmental problems more seriously, the self- administrative relationships.



Table 2. Transfer of Regulatory Power During the Creation of National Environmental ProtectionAgenciesCountry Year Environmental Agencies from wahich Regulatory Power

Agency Established was Transferred

Germany 1986 Federal Minister of the Interior;Federal Minister for Food, Agriculture and Forestry;Other Agencies;

Japan 1971 Ministry of Health and Welfare;Ministry of Agriculture, Forestry and Fisheries;Economic Planning Agency;Ministry of Intemational Trade and Industry;Ministry of Transport;Ministry of Construction;Science and Teclnology Agency;

United Kingdom 1970 Ministry of Housing and Local Government;Ministry of Transport;Ministry of Public Buildings and Works;Central Unit on Environmental Pollution (formerly partof the Cabinet Office);

United States 1970 Departmen t of Interior,Federal Water Quality Administration and the Office of Research on Effects of Pesticideson Wildlife and Fish;Departmenit of Health, Education and Welfare: Bureau ofWater Hygiene, Bureau of Solid Waste Management,National Air Pollution Control Administration, Bureau ofRadiological Health and the Office of Pesticides Research;Department of Agriculture: Pesticides RegulationDivision; Atomic Energy Commission:Division of Radiation Standards, InteragencyFederal Radiation Council.

In Japan, for instance, the national government the national government being neutral or, in someundertook many of the responsibilities of cases, adversarial (Box 12). Eventually, publicenvironmental policy with reluctance, while pressure led to a strengthened nationalcontinuing to place economnic development, environmental management regime.especially the promotion of industry, ahead of New environmental protection agencies often didenvironmental concerns. Political pressure, in the not fit into the existing pattern of governmentform of disciplining by the prime minister, often. decision making, and remained powerless in a wellcurtailed the agency's operation (Enloe, 1975). In entrenched organizational and institutional web.fact, the Agency's first director, who called for a This may explain the frequent changes in thestrong stance against pollution and a shift to administrative status of many environmentalstronger pollution management, was dismissed by protection authorities (Box 13).the prime minister and replaced by an administrator Today, the administrative status of the centralwho was less confrontational to business allies. The environmental agency varies in the reviewedlegal and administrative authority of the national countries. The Cabinet status of a full-blownagency was also curtailed. For example, only ministry, for example in Germany and France, givesprefectural governors had the right to directly environmental issues extra prominence. In the U.K.enforce certain laws, while in other cases, as in the and the Netherlands, environment represents part ofcase of aircraft noise regulation, the Environmental the responsibility of an operating ministry withAgency had no authority to interfere. Pollution budgetary and operating responsibilities in housingcontrol efforts at this stage, therefore, were and physical planning. In the U.S., the maindeveloped primarily by large cities in Japan, with environmental authority is the U.S. EPA, an


Administrative and Institutional Framework

Box 12. Bottom-up Development of Environmental Management in Japan

Due to its rapid economic growth and industrialization during the 1950s and 1960s, Japan suffered from seriouslocal environmental problems. A number of citizens' movements were born as popular opinion galvanized aroundincidents such as mercury and cadmium poisoning of lakes and the see, and the occurrence of asthma due to airpollution. Most complaints were directed at the local government level since the majority of the problems werelocal in nature and the national government did not have a clearly defined role in reducing pollution. Citizens'movements had a large impact on local politics, and opposition parties won a number of mayoral and gubematorialelections with pollution as an important platform. Local officials had played an important role in bringing industryto their areas and, therefore, felt a certain level of responsibility for regulating pollution. However, localgovernments were not sure of their legal authority to do so and called for a central response to environmentalproblems. The national government reacted by issuing reports that argued tlhat local governments did not have theauthority to regulate polluting industries. This response was unsatisfactory to local authorities and the public.Local governments played a pioneering role in environmental regulation. They were the first to enact pollutionprevention ordinances. Such ordinance was introduced, for example, by the Metropolitan Goverrnment of Tokyo in1949, the Osaka Prefecturate in 1950, and the Kanagawa Prefecturate in 1951. Special pollution control departmentswere also established. Although these early ordinances were not very effective in achieving real pollutionabatement, mainly due to the lack of emission standards and appropriate means of enforcement, they developedinto more powerful instruments over time. Additionally, local govermments acted - albeit in a piecemeal fashion- against the most extreme polluters in drawing up "Pollution Control Agreements" (PCAs) which had stricterstandards than the national law.National legislation followed the evolution of local initiatives only in the late 1960s and early 1970s. The firstattempt of the national government to address the issues raised by local authorities, hrowever, would haveweakened overall regulation, and was rejected by local govermueents. It was not until 1970, during the"Environmental Pollution Diet", that national pollution policy caught up with and even surpassed leading localpolicies. National laws were passed, and gave local governments the authority to impose stricter regulations thanthose stipulated at the national level. Local govermnents continued to take the initiative in some areas of pollutionmanagement. The government, for example, responding to pressure from the Ministry of International Trade andIndustry, the Ministry of Construction, business groups and parts of the Liberal Democratic Party, dragged its feeton a bill proposed in 1976 requiring EIAs for large-scale projects. Kawasaki City enacted its own program in 1977;Hokkaido Prefecture implemented one in 1978; and, by 1980, two more prefectures and one city also required EIAsthrough extra-legal guidelines.

independent agency reporting directly to the have a strong pro-environmental influence,President. The U.S. EPA has many of the regardless whether environment is the whole or onlycharacteristics of a Cabinet department, and part of his or her portfolio. In the Netherlands, forgranting cabinet status has been considered. The example, the prominence given to environmtentalsignificance of such status may be chiefly symbolic, protection by successive governments ensured thatalthough it would increase the weight accorded the all ministers have considered it a majorAgency's views in inter-departmental discussions. preoccupation. Such interest developed gradually inThe symbolism of a ministry devoted entirely to the the United Kingdom, where subsequent Secretariesenvironment is probably most important when the of State have focused on urban policy, localgovernment that previously did not take a strong government and environmental protection,pro-environment stance, wishes to make a dramatic respectively. Once, however, the importance ofand visible change in its policy. This was the case in environment was well accepted, ministers have usedGermany in 1987. In several countries (for example, their regulatory and budgetary power and theirSweden and Germany), the MOE is responsible for influence at the Cabinet table to induce complianceenvironmental policies, while a separate with environmental policies by polluters affected byenvironmental protection agency carries out their these broader areas of jurisdiction.technical implementation. Typically, the national agency responsible for

If the environment is a major and uncontested environmental policy has primary responsibility forconcern of the government and the nation, the the regulation of air and water pollution, public andminister responsible for environmental matters will hazardous waste disposal, noise, and, in many cases,

nuclear safety and the protection of nature.



Box 13. The Evolution of Environmental Protection Authority in France

Popular pressure for environmental improvements was modest in the early 1970s in France compared to otherOECD countries and, as a result, environment was not given a high political priority. Nevertheless, the President ofthe Republic set up a Ministry of the Protection of Nature and the Environment in 1971 on his own personalinitiative. This action was a great surprise to many within the Government.

A full cadre of staff was not available to the environmental authority in the early days of the new Ministry, andnumerous changes followed its establishment, reflecting the Government's efforts to come to terms with the cross-disciplinary and cross-sectoral nature of environmental management. The Government also sought to deal with thefact that a coherent system to manage environmental issues involved taking authority away from parts of thegovernment that are well-established and organized along sectoral lines. Even in cases where responsibilities werenot transferred to the environmental agency, the agency was expected to coordinate with and influence parts of thegoverrnment that had greater expertise, political weight, and financial resources than those available to theenvironmental protection.

Over the next decade and a half, the French environmental ministry was reorganized on numerous occasions: in1974, it was attached to Cultural Affairs; from 1974 until 1977, it was attached to Quality of Life; in 1978, a Ministryof the Environment was established along the lines of the Ministry of the Environment in the United Kingdom; in1981, the Ministry of the Environment recovered the environmental departments it had lost earlier and regained itsautonomy; in 1983, a Secretary of State for Environment in the office of the Prime Minister was created withresponsibility for the environment and quality of life; in 1986, its responsibilities were delegated to the Ministries ofInfrastructure, Housing, Land Management and Transportation. Later, a Secretary of State charged with theenvironment was re-established in 1988 in the Prime Minister's office, anid upgraded to the status of DeputyMinister in 1990. In 1989, responsibility for technological risk and natural disasters was transferred to this Secretaryfrom an ephemeral Secretary of State that has also been at the level of the Prime Minister. An EnvironmentalMinistry was finally set up again in 1991.

Throughout the 1970s and 1980s, the environmental administration gradually took on the functions needed toproperly manage environmeintal policy. It also became more rationally organized and connected to the rest of thegovernment. Over the years, the increasing political importance of environmental issues has been reflected in theincreased personal influence of the minister or other chief official responsible for environment within thegovernment.

However, many environmental issues cut across the management. Water quality regulation is a typicalmandates of several ministries and agencies (Box area where historically developed and strong water14). Additionally, the nature of the most serious management authorities dominate, often preventingenvironmental problems and the type of institutions new environmental protection agencies from gainingtraditionally involved in the regulation of certain full control. Conflicts of interest may arise,economic sectors (frequently those that are the main however, when regulatory and operating functionscontributors to environmenltal problems) influence in the same sector are combined. This used to be thethe distribution of primary environmental protection case, for example, in the British Water Authoritiesfunctions. In the U.K., for example, environmental until 1989, when the National Rivers Authorityprotection authority remained dispersed among a (NRA) was established, separating water qualitynumber of regulatory bodies (Department of management from the regulation of water use; and itEnvironment, Ministry of Agriculture, Fisheries and is still an issue in the Netherlands affecting theFood, National Rivers Authority and others) until protection of nature in agricultural reclamationrecently. In Germany, the Ministry for Agriculture efforts.retained control over pesticides and landscapeissues, together with the Ministry of Health that also The Administrative Control ofhas a regulatory role of hazardous chemicals. In the Environmental Protection AgenciesNetherlands, the protection of nature belongs to theMinistry of Agriculture, and water quality The relationship of elected officials and themanagement is assigned to the Ministry of Traffic administration is a principal-agent relationship inand Transport, traditionally responsible for water which the principals (elected officials) have to



ensure that the agents (appointed administrative Bureaucratic behavior may also lead to budgetbureaucracy) carry out their policy intentions. maximization rather than efficient regulation. In theElected officials, therefore, determine administrative U.S., for example, organizational failures of theprocedures that restrict the discretion of agencies in executive agencies have frequently contributed totheir decision making and actions, and establish a their relatively weak performance, lagging behindmechanism of monitoring, rewarding and punishing the legislative effort. Between U.S. EPAthe agencies depending on their compliance. As headquarters, its regional offices, and state agencies,McCubbins et. al. (1987) pointed out, elected officials for example, the distribution of responsibilities hasare trying to create a decision making environment been blurred, causing friction, ineffectiveness, andin the appointed agencies that reflects the political lengthy procedures (Beal, 1978). The U.S. EPA alsocircumstances and consensus of various interests. deviated sometimes from the intended policies ofAs a result of fragmented policy making and the Congress. Under the Superfund regulation, forexistence of conflicting interests and constituencies, example, the Agency's ad hoc analysis of individualagencies practically must be responsible to not one sites disregarded the safety standards developedbut several principals, which may influence the under other regulations, and allowed for theagency in different directions. Additionally, consideration of factors that were not intended bypolitical interests and constituencies change over the legislative branch. Cohen and Rubin (1985), fortime, altering political choices and decisions. If such example, refer to a survey by a subcommittee of thechanges are not reflected in the decision making of House Committee on Energy and Commerce thatthe agencies, mismatches will occur between the found the U.S. EPA's monitoring of hazardousintention of elected officials and the operation of waste dump sites "inaccurate, incomplete, andagencies. Monitoring and intervention in the unreliable". As a result, as Florio (1986) pointed out,operation of agencies require significant resources. the U.S. Congress had lost its confidence that theElected officials, therefore, have to make a trade-off U.S. EPA would exercise its authority in the waybetween the extent of agency compliance and the intended, and assumed the role of regulator bycost of assuring it. As a result, compliance of the making detailed technical rules and regulations onagencies with the intention of elected officials is several occasions1 , curtailing the U.S. EPA's playingrarely perfect. field.

Even with all the relevant environmental The discretion of implementing agencies inobjectives and an adequate legal framework in place, setting rules and regulations, granting permits,the realization of policy objectives may be enforcing, and providing exceptions and extensionsvulnerable to implementation disruptions and poor of the deadlines for compliance depends on theorganizational design. Government agencies administrative style of regulation (see underdesignated to implement environmental policies Consensus Building in Chapter 1). In Japan,may lack economic incentives to operate effectively.

Box 14. Distribution of Environmental Protection Responsibilities Among Government Agencies inSwedenMinistry of Agriculture: Agriculture; fisheries; food control; game preservation; bio-fuels;Ministry of Defense: Environmental protection at military sites; measurements of atmospheric radioactivity;Ministry of Environment: General environmental policies;Ministry of Finance: Environmental taxation and environmental accounting;Ministry of Foreign Affairs: International environmental negotiations; environmental aspects of foreign politics anddevelopment assistance;Ministry of Health and Social Affairs: Environmental health issues;Ministry of Industry and Commerce: Energy prices; environmental support to business, forestry and mining;Ministry of Labor: Occupational safety including indoor environment;Ministry of Public Administration: Green labeling; environmental consumer issues; andMinistry of Transport and Communication: Environmental inmpacts of transport, traffic planning, meteorological,hydrological, geotechnical and oceanographical surveys.

Source: Kahn, 1996.



Box 15. "Gyoseishido" or Administrative Guidance, and Pollution Control Agreements in JapanFormal laws and regulationrs are not always the most important means of achieving policy goals in Japan.Administrative guidance n- negotiations between the regulator and regulated entities prior to establishingregulations -, and pollution control agreements often play a significant role.Yokohama was the first area to require new industry moving into the city to sign Pollution Control Agreements(PCAs) as part of their land sale agreements. At the time, the city had no legal authority over pollution mattersand, thus, these agreements were outside the law. Yokohama was able to do this without fear of competitionfrom other cities because urban land had become scarce and local governments were able to make demands onthe industries that wanted to move into their jurisdictions. Kanagawa Prefecture took the process a step furtherby adding a permit system for new polluting factories to its ordinance in the 1960s. Tokyo soon followed suit,expanding PCAs to existing industries, as did many other urban areas throughout the country. However, thenumber of agreements that a local government could negotiate was limited, and they thus covered only a smallnumber of large firms.PCAs were used, for example, in Osaka City to reduce severe atmospheric sulfur dioxide (SO2) pollution by theuse of lower-sulfur fuels in local factories. Similar agreements were implemnented in Yokohama city in the 1970sto address pollution from small and medium sized factories, and in Kitakyushu city to implement pollutionprevention measures. In persuading businesses to cooperate, local governments often use incentives such aslow-interest loans and tax reductions in exchange for timely complianvce with governiment requirements andguidelines. One of the main advantages of this administrative tool of persuasion has been the immediate actionfollowing the agreement as opposed to lengthy legislation and implementation. In fact, it has been often used asprecedent before the introduction of regulation.

Even though members of the national governiment argued tlhat PCAs were not legally binding, the nationalgovernment had no jurisdiction over them since the agreements were essentially "extra-legal" and "private" (that is,between the community as represented by the local government and tlle individual industry).

Source: Mori, 1993.

The public may become part of or witness of insufficient and ineffective to ensure thenegotiations, however, the majority of cases are achievement of required environmental qualityunavailable to citizens and citizen groups (OECD, (Hucke, 1978).1994b). Public pressure, as well as traditional By contrast, the discretion of the U.S. EPA hasrespect for agreements play an important role in been traditionally curtailed by Congress to ensureensuring compliance which, therefore, is very that the regulators are not co-opted by those they arestrong. In the U.K., the HMIP enjoys significant to regulate. Private negotiations have been alsodiscretion in licensing on a case-by-case basis, constrained by the adversarial culture and mistrustapplying the BATNEEC and BPEO principles (see of government authorities. The U.S. practice is oftenPolicy Implementation Approaches and Instruments in referred to as eniforced compliance model as opposed toChapter 1). Inspectors are requested to assess not the negotiated compliance model. The enforcedonly the physical conditions of the plant, but also the compliance model relies on enforcement mechanismsquality of operation and management including such as fines, penalties and cease and desist orders.such areas as training, procedures and instructions, Hunter and Waterman (1990), however, point outand auditable environmental management systems that the wide range of enforcement mechanisms(Slater, 1996). Guidance notes, issued by the from strict administrative orders to comments andDepartment of Environment, however, provide only warning letters, in fact, allows flexibility even in thelimited help with the interpretation of BATNEEC enlforced compliance model2 . The adversarialand BPEO principles to introduce consistency in regulatory style, however, resulted in a largelicensing. Suggestions have been made, therefore, to administrative burden and serious backlogs inintroduce cost-benefit considerations in a more compliance, leading to a search for new approaches,consistent manner (Helm, 1993). Even in countries such as "reg-neg" (see under The Role of Courts inwith a long tradition of detailed laws, regulations Chapter Two) and voluntary programs (Box 16).and enforcement such as Germany, administrative Negotiations, however, are carried out inbargaining has been accepted, recognizing that structured and formal way, and their ultimatecoercive power and legal requirements were outcome (Consent Decrees or Compliance Agreements)



Box 16. Experimenting with Voluntary Environmental Regulation in the U.S.

In 1991, the U.S. EPA initiated the 33/50 program which introduced a new concept to the agency's regulatoryapproach that traditionally focused on end-of-pipe control, and created an adversarial relationship with theregulated industries. The 33/50 program is built on the voluntary prevention of toxic chemical releases byindustries participating in the program, and on the availability of public information in the Toxics ReleasesInventory (TRI) under the Emergency Planning and Community Right to Know Act of 1986. Unlike other regulatoryapproaches that involved costly and timely litigation, the 33/50 program facilitates cooperation between theregulatory agency and industries. As a result, industries gained more flexibility in reducing emissions than undercommand-based regulations.

What makes industries and firms voluntarily reduce their emissions beyond the required minimum? Arora andCason (1995) have pointed out several possible explanations:

. They try to minimize public scrutiny and regulatory surveillance by demonstrating commitment to beenvironmentally conLscious;

. They target market segments that are willing to pay for environmentally friendly images and products; and

. They support tighter standards to make entry to the market more difficult.Public awareness through the availability of data about toxic releases, and information about the participants

and their pledges in the 33/50 program are key to the success of "voluntary regulation". As Arora and Casonshowed, large emitters that probably have the higlhest potential for reduction are most likely to participate in theprogram; and firms in unconcentrated industries are more motivated to participate than firms who dominate themarket.Voluntary programs are viable options to supplement traditional environmental regulations by reducing enforce-ment cost and increasing flexibility for industries to reduce their emissions thle most effective way.

often still has the character of an out-of-court predictability of management if regulations aresettlement, which can be enforced by courts in excessively strict and enforcement becomesresponse to citizens' complaints even without arbitrary.further intervention by inspectors. In some states, The main objective of environmentalspecial programs (as, for example, the Sonoma management and regulation is to improveGreen Business program in California) have been environmental quality by altering the behavior ofdesigned to change the fundamentally adversarial various private and public bodies. Inevitably, thererelationship among regulatory agencies and is pressure on the implementing agency for looserbusinesses (Stiles, 1996). regulation which may come from the regulated

Discussions between polluters and entities or from government agencies operating inenvironmental authorities are never perfectly the regulated sector. Such pressure, however, canharmonious. On the contrary, the affected parties be greatly reduced if a consensus is reached early income to the negotiating table not solely out of the policy making procoss (see under Consensusdevotion to the environment, but also out of fear Building in Chapter 1). Additionally, the separationthat failure to negotiate will result in measures that of enforcement functions and an arm's lengthmay impose stricter requirements than those relationship between elected authorities and theconcluded by negotiations. In fact, the threat of agency that carries out enforcement may beusing the typical mechanisms and tools of the desirable to ensure that once regulations are set,enforced compliance model should be employed in the political considerations do not interfere withnegotiated compliance model as a bargaining chip. enforcement. The policy making body, however,However, the more open a regulatory system is to should have the authority and responsibility todiscretion, the less firm is the long-term ensure that the quality objectives are maintainedcommitment regulators make, and the less during the enforcement process. In thepredictable and credible their decisions may Netherlands, for example, the enforcement functionbecome. The lack of predictability in environmental fulfilled by environmental inspectorates is separatedregulation increases the cost of compliance, the risk from the licensing function. Additionally, anof moral hazard, and reduces incentives for long- environmental police force with special courts andterm environmental investments. Furthermore, prosecutors oversees the enforcement offrequently changing requirements increase the risk environmental laws. In the United Kingdom, aof unnecessary investments. Some analysts (Vogel, semi-independent environmental authority was1986) point out, however, that systems with limited established to ensure that the implementation andagency discretion may also undermine the enforcement of policy are kept free of political



Box 17. ISO 14000 - Voluntary Compliance Program, New Corporate Management Approach, andInventive Marketing ToolThe ISO 14000 series of standards under development by the International Organization for Standardization (ISO), isa structured approach to corporate environmental management in order to improve compliance with nationalenvironmental regulations and legislation. ISO 14000 includes, inter alia, standards for carrying out environmentalaudits; setting policies and performance targets; preparing and implementing environmental action plans; carryingout environmental labeling; and monitoring and reporting performance.

ISO 14000 may become a useful tool for drawing company managers' atten-tion to the environmental aspects ofbusiness; incorporating environmental considerations into planning, operations and marketing; and identifying andevaluating altemative solutions to solving environmental problems. It does not, however, replace the need forenvironmental regulations and enforcement. Instead, it provides a tool for better compliance through improvedmanagement, and could be used to introduce a certain degree of flexibility in the environmental regulatory system,allowing for various measures to reach comphance.

Although the program is voluntary, the ISO 14000 is expected to become an intemnational standard forenvironmental management. Certain concerns exist, therefore, that it may become a bureaucratic approach toenvironmental management standards favoring large intemational corporations, which can easily absorb theadministrative costs of ISO 14000 certification as a marketing expense, while posing relatively high compliance coststo small and medium enterprises. There are also doubts about the applicability and impacts of ISO 14000 ondeveloping countries where environmental regulations are sporadic, enforcement is weak, industrial managementperformance is often poor, domestic markets do not require good environmental performance, and local capabilitiesare inadequate to administer the system.

In general, there are several conditions for an environmental management tool such as ISO 14000 to be feasible andeffective in a country:

* Environmental regulations should be in place to provide guidelines for performance;* The enforcement of environmental regulations should be perceived as a real threat of punishment for

violators;* Environmental regulations should allow flexibility in colmlpliance;* Corporate management should be responsive to the requirements of environmental regulations and

capable of translating them into an effective corporate management responses;* Customers should be concerned about environmental problems, and be willing to reward environmentally

responsible corporate behavior; and* A well developed administrative system should be in place to address auditing, registration, labeling,

certification, registration and supervision of the program.

interference. In the literature, private enforcement measures that focus on changing behavior at thehas also been suggested as a viable alternative to micro level (see also Policy Implementation Approachespublic agencies (Cohen and Rubin, 1985). However, and Instruments in Chapter 1).such a mechanism has not been introduced in Several countries introduced systems to providepractice. guidelines and a framework for environmentally

At the micro level, compliance with responsible management practices. These systemsenvironmental regulations and the identification incorporate environmental management in a broaderimplementation of effective solutions to pollution initiative to ensure high quality in all managementproblems require a change in corporate management areas, or build on previously developed qualityphilosophy and practices affecting not only management standards. Chemical manufacturers'production processes and product design, but also associations in the U.S., the U.K. and Japan, forsuch areas as financial and cost accounting, and example, adopted the Responsible Care codes forcapital budgeting. A concerted effort of operational, health, safety and environment managementfinancial and marketing management, therefore, is practices to ensure an ongoing improvement innecessary to improve environmental performance, company performance. In Germany, severalcompliance with regulations, and allow commercial voluntary agreements have been put into placecompetitiveness at the same time. Only recently between industries and the administration.have countries turned to incentives and regulatory



Box 18. Administrative Changes Support Integrated Pollution Management in the U.K.Traditionally, British pollution management and institutions have developed in a fragmented manner focusingon specific substances and/or environmental media. As a result, a range of inspectorates were established todeal with emissions from industry. The Alkali Inspectorate was originally founded in 1863 to controlhydrochloric acid emissions from alkali manufacturers. In a network of inspectorates including Inspectorates ofWaste, Radioactive Substances, Water Quality and a range of organizations operated by local authorities, theAlkali Inspectorate (re-named to Industrial Pollution Inspectorate in 1982) became the most general air pollutioninspectorate. Due to the fragmented and media- and substance-specific nature of permitting and inspecting,industries often had to apply for multiple permits.

The institutional structure of British pollution management has changed gradually to reflect a growingacceptance of the need for integration. In 1987, Her Majesty's Inspectorate for Pollution (HMIP) was establishedwith the amalgamation of separate pollution inspectorates to facilitate multi-medium approach and integratedpollution management. The Environmental Protection Act of 1990 strengthened the HMIP by increasing itspowers.

Additionally, the National Rivers Autlhority (NRA) was established in 1989, separating the regulatory functionsresponsible for water use and water quality. This measure was expected to eliminate potential conflicts ofinterests and to improve water quality management. Further integration took place in 1996 with theestablishment of a new Environmental Protection Agency combining the HMIP, NRA and waste regulationauthorities.

Additionally, in the framework of the Duales System widely accepted standard methodologies.Deutschland GmbH, a group of 40 firms, largelypackaging companies, pledged to ensure the return Organizational Structure of Environmentalof primary packaging material for recycling (OECD, Authorities1993). The British Standard 7750, designed toimprove the environmental performance of National environmental protection agenciescompanies, followed quality management standards traditionally allocated responsibilities along lines ofBS 5750 and BS 7750. A standardization of media specificity. The strong medium- and subjectcorporate environmental management approaches orientation was the consequence of the wayis taking place by establishing ISO 14000, a environmental agencies were set up, but it was alsovoluntary program prepared by the International reinforced by the piecemeal fashion ofOrganization for Standardization (Box 17). Such environmental regulation that tended to re-assignnew voluntary approaches that target changes at the responsibilities along these lines. In the U.S., formicro level, are likely to gain an increasing role in example, a number of environmental legislation wassupplementing traditional regulation, largely due to passed in the 1970s, mainly in response to thethe cost saving they offer. problems that seemed most pressing; creating a

Additionally, several countries have introduced separate regulatory regime for each medium oreco-labeling systems, for example the German Blue subject within the agency: Seventy to eighty percentEnvironment Angel label, using life-cycle assessment of the U.S. EPA's budget has been comprised of non-to evaluate the full environmental impacts of a discretionary funds allocated to programs underproduct, process or activity. Eco-labeling systems, specific pieces of legislation, and each program hasset by governments or firms, attempt to solve the been responsible primarily for implementing specificinformation asymmetry and uncertainty that laws. The administrative structure of the U.S. EPAprevents consumers to assess the environmental directly reflected this ad hoc pattern offriendliness of products. Eco-labeling systems can development. Each program was responsiblebe effective if consumers are environmentally primarily for implementing a specific law that hadconscious and willing to pay higher prices for been passed in response to public and political"environmentally friendly" products. Such systems, pressure over a particular environmental problem.however, require a significant infrastructure of Some of the regulatory practices of these programsconsulting services with analytical capabilities, and were not consistent, even when pollutants were

controlled in the same way in different programs.As a result, the Agency was able to adjust programs


Envirormental Management and Institutions in OECD Countries: Lessons from Experience

and create new initiatives only incrementally. logical grouping of activities (for example., specialAlthough this was seen as a pragmatic solution to needs of small communities). The clusters arethe problems, it led to difficulties later on as it was assigned the tasks of integrating the implementationdiscovered that pollution was simply being of existing regulations and activities. In some cases,transferred from one medium to another, rather the clusters have the authority to review and sign-offthan being reduced in the aggregate. on new regulations. This is part of an overall

The need for environmental authorities to show attempt to coordinate the agency's regulations andquick victories to maintain public and political other activities in a manner that addresses the cross-support also thwarted reorganization. The early media impacts of various types of pollution. In theattempts in the U.S., for example, to (re)organize the Netherlands, the Ministry of the Environment hasU.S. EPA along functional lines were seen as created two sets of teams: one organized aroundrequiring a large effort and long time horizon. The clusters of issues (acidification, chemical hazards)requirement to assimilate various units brought in and the other around target groups (refineries,from other agencies seemed too burdensome in farmers, builders). Each staff member mustaddition to difficulties in organizing and retraining participate in a team in addition to his or her media-staff to focus on environmental issues, even within based responsibility. The cross-channels oftheir more familiar subject of expertise. Inherited communication and responsibility fostered by thesedivisions continued to seek support from their teams give the ministry the character of a matrixtraditional allies outside the agency, and new organization, enhancing integration at the policyfunctional units simply added to the many level. The Swedish environmental authority hasconflicting objectives that the agency was expected been organized by sector rather than by mediumto meet, further delaying attempts to establish since very early in its history, an approachintegrated management. supported by extensive cross-media training of

The gradual development of integrated technical staff. After a few years of experienceenvironmental policy making has required changes working closely with colleagues trained in otherin the administrative structure and procedures to environmental media, staff were generally capablesupport mechanisms of stronger cross-sectoral and of taking responsibility for all the environmentalcross-media integration. In the U.K., for example, impacts of a proposed installation, and ofchanges in the administrative structure helped approaching new issues from a broad, cross-mediaovercoming the drawbacks of traditionally perspective, consulting with experts on especiallyfragmented environmental policy making (Box 18). difficult technical problems.In the U.S. EPA, teams were formed of technical and Additionally, administrative procedures havemanagerial staff from different parts of the agency been introduced that can facilitate an integration of(called "clusters") to focus on problems related to environmental policy implementation:specific sources (for example, petroleum refining), * Environmental Impact Assessments (ELAs)pollutants (for example, lead), environmental provide an analytic framework to be followed byresources (for example, ground water) or other policy makers and project promoters during the

Box 19. Integrated Permitting in FranceEnvirorunental permiting is handled by DRIRE (Direction Regionale l'Industrie, de la Recherche et del'Environnement) at the regional level in France. Typical environmental permits may be lengthy documents withfour main parts:

• Description of permitted facility and operations;• General environmental requirements;. Specific requirements; and. Sanctions for non-compliance.

Each facility receives one comprehensive multi-media environmental permit that addresses cross-media effects andcover such areas as (i) air pollution; (ii) water pollution; (iii) waste management; (iv) noise and vibration; (v)security; (vi) building design; (vii) emergency measures; and (viii) training requirements. Such permits reducepotential duplication in administrative efforts in the facilities, as well as the environmental authorities.

Source: Stiles, 1996.



planning of a policy or project, thus facilitating however, is complcated by the vast number ofintegration both across different environmental harmful substances that need to be controlled. Amedia and various economic sectors. ETA solution to this problem may be to divide the rangeprocedures have been a centerpiece of of substances into more general categories, and toenvironmental policy in the U.S., France and develop regulations by category rather than forGermany for more than a decade, and have recently individual substances.been required by a European Union directive. Many * Geographical or regional approach defines thepoint out that a proper EIA can save project sources and effects of a problem and determinesdevelopers both time and money. British Gas, for what needs to be done about them. It may be usedexample, has saved over 30 millon pounds over tenexample has saved over 30 milhon pounds over ten on a nationwide scale through national planning, oryears by preparing full assessments before seeking may deal specificaly with particular ecologicalauthorization for projects, thus enabling applications resources or with areas that are major sources orto be considered more quickly. EIAs can also recipients of pollution, such as the Great Lakes ofcontribute to the improvement of the overall the U.S. and Canada, and the North Sea of Europe.planning of a project, so that direct economic River basin management (for example in France)benefits can be increased. also belongs to this category (see also under

* Integrated permitting ensures the "Distribution of Political and Administraiveconsideration of all releases from a manufacturing Authority" in Chapter 2).process or facility. Polluters can obtain either asingle permit for all emissions or submit Human Capacity of Environmentalapplications for all permits at the same location. In Managementtie U.K., for example, Her Majesty's Inspectorate of gPollution (HMIP) was recently reorganized toimplement "one-stop" permitting by granting all In general, environmental policy-making is apollution permits at a single location. Even though complex task that requires a mix of political,pollthinspetraite still consistse lofmetiaorie. . , economic and legal skills, on the one hand, and

scientific and engineering skills, on the other. Policyinspectors, interaction between the inspectors has implementation also requires poltical skills toopened up possibilities for integration and cross facilitate consultations between those responsible forconsideration of pollution problems in various drafting regulations and those responsible formedia. In Sweden, a system of integrated enforcing them. The type of required scientific andpermitting has been in effect since 1969. In this engineering skills depends on the nature of thesystem, larger plants receive their multi-media environmental problems. In the Netherlands forpermnits from the National Licensing Board, smaller example, where water problems dominate, theones from the State County Administration (Kahn, government requires large numbers of hydrologists1996). As Stiles (1996) pointed out, integrated and civil engineers. Germany, where land usepermitting in France dates back to the Napoleonic creates significant problems, employs large numbersera (Box 19). In the U.S., integrated permitting has of architects and construction engineers.only been introduced by some innovative states. In Historically, the professional and skill mix ofMinnesota, fo7 exmaple, the Environmental environmental protection authorities did notCoordination 1. ocedures Act allows industries to typically reflect an optimal ratio of technical andsubmit one master apphcation for permits, and managerial staff. The majority of personnel wasmulti-media inspections have been introduced. trained in a single medium, such as water, air, orStiles (1996) pointed out that such inspections wastes as a consequence of the historicalincreased management's understanding of development of agencies which were set up alongenvironmental problems and mulh-media the lines of environmental media. Many of the

envirSrubsntance or plnr forthe technical personnel were more familiar with andreulti nco hzrpolu chem ntd oxch . committed to sector or media-related issues than in

segubstanc is hazandoth alterncative n toxmedia- d general than environmental issues. In Japan, forsubstances iS another alternative to media-based exml,teancwscrtdbyflgkyexample, the agency was created by filling keyregulation. It is frequently used for substances that positions with staff transferred from ministriesare of concem for their effect on workers' health or whos interstaff hradited envirornnental.. . fT1 . .... ~~~~whose interests often contradicted environmnentalon specific receptors (e.g., humans, soil). Toxic objectives: staff was transferred, for example, fromsubstances are controlled or banned regardless of the Ministry of Interational Trade and Industrythe media in which they occur. This approach,



(MITI) to handle air and water pollution; from the which the agencies are responsible for operating andMinistry of Transport to deal with motor vehicle enforcement functions; and the extent to which theypollution; and from the Ministry of Agriculture to rely on in-house technical skills as opposed to skillsmanage soil pollution and agricultural chemicals. contracted from the outside.As the Japanese government became aware of the The division of labor among different levels ofseriousness of environmental problems and their government is influenced by the geographiceconomic impacts, the patterns of selecting staff concentration or dispersion of the majormembers changed. Key positions were filled, for environmental problems facing the country. Localexample, with staff from ministries such as the administrative capabilities for environmental workMinistry of Health and Welfare. changed significantly over the past 20 to 25 years.

Staffing patterns and habits have often led to As environmental conditions deteriorated andpersistent difficulties in reorienting environmental problems became more urgent in the 1970s, thepolicies along integrated lines. The staff of British number of local government staff devoted toregulatory bodies, for example, did not change after enviromnental work increased. New units were setthe Department of the Environment was established up to deal with pollution, especially in projectin 1970, and environmental regulations continued to planning and development. Over time, the largerbe written by largely technically and scientifically units were broken down into specialized units andtrained personnel. During the first years of its departments. Many local governments set up theiroperation, most of the U.S. EPA's staff also consisted own environmental research and testingof scientists and engineers drawn from other federal departments. Even today, as new concerns come tobureaucracies. They were often accustomed to the forefront, local governments continue to set upworking in large departments, far from public special units to deal with them. Local researchscrutiny, and brought with them the concepts, organizations, for example, are studying localizedattitudes and skills that had been useful in their environmental issues and nature conservation.former agencies. The group that was transferred Some local governments are in the process of settingfrom the Department of Agriculture to deal with up units to address global environmental issues.pesticides, for example, had formerly focused onpromoting agricultural productivity, without much Technical Backgroundconsideration of human health and environmentalimpacts. Early environmental laws had focused on Environmental management cannot be carried outplanning, grant administration and technical effectively unless it is underpinned by a reliable andassistance, and staff members were not experienced effective technical and research base. Additionally,with the adversarial postures necessary to win environmental management organizations have tolawsuits over contested regulations or to hunt down be seen as reasonable and well informed by publiclaw-breakers aggressively. Al: the time, it was and industry alike. As Helm (1993) points out,important to gain public and political support by however, despite the considerable monitoringquick victories in the litigation of particular issues capabilities of environmental protection agencies,that were typically specific to a particular regulators are often forced to rely on informationenvironmental medium. provided by the regulated entities that may lead to

After several years of operation, economics still "regulatory capture": the strategic use ofremains only a minor part of the skill mix of information by the regulated to influence regulatoryenvironmental agencies in most European countries. outcome. The most basic environmental service,This could be one of the reasons behind the strong environmental monitoring, as well as researchreliance on technology-based ,command-and-control including such fields as toxicology, epidemiology,approaches to policy implementation. A shift in skill biology, analytical chemistry and hydrology, shouldmix may be expected as the aggregate cost of yield information that supports policy making,meeting environmental standards rises and the implementation and enforcement. They should notinterest in using economic incentives increases. The be used, however, as a substitutes for action, or as arole of generalists may similarly increase as cover for inaction.integrated pollution management gains larger The command-and-control type environmentalprominence. The staffing patterns of the management systems of the reviewed OECDenvironmental agencies of the countries in this study countries rely heavily on permitting and licensingvary also according to the major environmental based on zoning regulations and emissionproblems confronting the country; the degree to standards, and an extensive network of monitoring



Box 20. Development of Air Pollution Monitoring System in the U.S.The development of the National Air Sampling Network started in the U.S. in the 1950s. The master plan adopted in1956 provided for monitoring of all the major population centers. Equipment and supplies were provided by thePublic Health Service, while sampling was carried out by the local health departments. Samples were analyzed forPM, organics, nitrates, sulfates, lead, beryllium, nickel, chromium, vanadium, and other metals and substances.Development of the monitoring system took place by the introduction of the continuous monitoring program in1961 designed to automatically measure ambient concentrations of CO, SO,, NO. and total oxidants, and total HCs.Gradually, the need to process, analyze and disseminate large amounts of data led to the development of SAROAD,an automated data storage and retrieval system.Additionally, local and state agencies have established their own monitoring programs directed to supportenforcement primarily by sampling pollutants for which U.S. EPA has issued criteria documents (PM, SO,, NO.,CO, oxidants, HCs). However, differences in equipment and the lack of standardized quality assurance and controlin various states hindered the comparability of monitoring data and the need for reliable monitoring network wasrecognized. This lead to the establishment of National Air Monitoring Stations (NAMS).

The Pollutant Standards Index (PSI) provides U.S. EPA with a uniform system of measuring pollution levels forthe major air pollutants regulated under the Clean Air Act. Index figures for five major pollutants enable the publicto assess the quality of air in a particular location. PSI converts the measured pollutant concentration in acommunity's air to a number on a scale of 0 to 500, the standards corresponding to 100 on the scale. The intervals onthe PSI scale relate to the potential health effects of tlhe daily concentration of each of the pollutants measured. ThePSI places emphasis on acute health impacts occurring over short periods of time rather than chronic impactsoccurring over longer periods. Thle limitations of PSI assessment are conlected with the existence of other factors-that the system does not consider. These include the size of population exposed; the effects and nature ofdispersion; the representativeness of the sample; other than human health damages; and the interaction of variouspollutants.

stations. Government monitoring is usually maintain the monitoring network established insupplemented by a system by which individual collaboration between the MOE and localpolluters monitor their own activities and are, in authorities. In "Danger Zones" (highly pollutedturn, monitored from time-to-time by official industrial areas), a network of stations are installedinspectors. Additionally, health monitoring is by the Government that has the power to ordercarried out by environmental and public health polluters to switch to less polluting fuels (Bennett,authorities. This entire system is supported by a 1991). In Germany, two ambient monitoringnetwork of laboratories and technical services, and networks exist, a more comprehensive networkbasic and applied research. The subjects of research operated by the states, and a second, smaller oneand the scientific and engineering disciplines operated by the Federal Environment Agency3 . Theinvolved usually include hydrological studies of the main responsibility for monitoring lies with themovement of ground water and of oceanographic states. In the U.S., the monitoring network of statescurrents, limnological studies of the chemical is also supplemented by a national network (Box 20).structure of lakes, meteorological studies of wind Monitoring, however, is often dispersed amongand rainfall patterns, ecological studies of forests, government agencies reflecting the distribution oftaxonomic studies of biological species which serve policy and implementation responsibilities. Inas indicators of the health of ecosystems and of the France, for example, water quality is monitored bylevels of pollution they bear, to name just a few. the Ministry of Navigation for big rivers, the

Environmental monitoring is often delegated to Ministry of Agriculture and Infrastructuresub-national level in OECD countries. In Japan, for depending on the use of water, the French Instituteexample, the nationwide network of monitoring for Ocean Research for salt water, and the Ministrystations, largely responsible for monitoring of Environment for ground water. Cooperationbackground conditions and gathering basic among government agencies to reduce overlaps orinformation, is supplemented by local monitoring utilize existing technical facilities takes place; forof air pollution, conducted under the example, the MOE in France subcontracts its groundresponsibility of mayors and managers at the water monitoring tasks to the Bureau for Researchprefectural and local levels (OECD, 1994b). In on Minerals.France, a number of associations have been set up to Several of the MOEs maintain their own



Box 21. Changing Approach to Environmental Research in the U.S.

Research at U.S. EPA has traditionally focused on fulfilling the agency's immediate regulatory needs, namely toprotect air and water quality; control pesticides and toxic substances; ensure the safe disposal of solid andhazardous wastes; and clean uip abandoned hazardous waste sites. The Scientific Advisory Board (SAB) has playedan important role in a number of U.S. EPA initiatives, encouraging the agency to take a broad and prescriptiveapproach to doing environmental research in order to meet its overall mandates. According to the Board, the U.S.EPA should be more than just a regulatory agency, and should take on more of the role of a science agency. If theU.S. EPA were to expand its research capabilities, the Board has observed, it would be better able to identify theU.S.'s environmental problems and possible solutions rather than simply reacting to priorities set by the Congress.

In the late 1980s, the Board also recommended that the agency reevaluate its environmental and health researchprograms. This led to a major new 'core research" approach instituted in 1989 for building the Agency'sinformation base in four key areas: ecological risk assessment; health risk assessment; risk reduction; andexploratory grants and research centers.In 1995, the Congress directed the U.S. EPA to commission an independent National Research Council (NRC) forassessment of its research and peer review. The NRC was supportive of the agency's effort to revamp its researchoperations to increase the role of long-term fundamental and anticipatory research programs (increasing budgetallocation from 30 to 50 percent). Some concern was expressed, however, stating that the scientific and regulatoryneeds of regional offices should not be compromised by the new direction of research, and suggestions were madeto improve scientific interactions between regulatory offices and the research staff.

monitoring and research personnel and technical government policy-makers and legislators.basis, or affiliated research institutes. In the Many of the government agencies rely on privateNetherlands, for example, the major technical or semi-public independent research institutes toresource on environment is a government carry out specific tasks. In Germany, the technicallaboratory, the National Institute for Public Health inputs to standard setting are provided by privateand Environmental Protection (RIVM). RIVM is entities: the Technical Inspection Associations, theresponsible for monitoring, as well as Association of German Engineers (VDI), and theenvironmental research. It operates the air quality German Institute of Standardization (DIN). The VDImonitoring network both for the direct monitoring produces guidelines for emission limits which areof ambient quality and the surveillance of the self- frequently incorporated by reference into legislation,monitoring systems of indiviidual polluters. RIVM a practice which in effect delegates value judgmentsscientists built the model which served as the basis regarding acceptable levels of risk to a committeefor the strategic decisions underlying a major composed entirely of engineers. In the U.K., therecasting of Dutch environmental policy. Other major technical resources are based at governmentbranches of RIVM do research, inter alia, on laboratories specializing in air and water pollution,methodologies for environmental monitoring and climatic change and hazardous and nuclear wastes.systems for minimizing waste and environmental These laboratories operate as independent agenciesdisruption, including "clean" technologies. The and their clients can include a number ofU.S. EPA carries out a major environmental departments or other public or private bodies.research program with an annual budget of Integrated research, for example, research thatseveral hundred million dollars, covering all focuses on so-called "clean" technologies, canaspects of the environment: pollution detection; facilitate the integration of environmental policy.the fate and transport of pollutants; remedial Clean technologies reduce harmful impacts on thetechnology; development and demonstration of environment through reduced pollution and wasteinnovative technology; pollution prevention; and minimization and are carried out in all reviewedeconomics and health. In France, the Service for countries. The ministries of environment of severalthe Research, Study and Treatment of countries, including France, the U.K. and theEnvironmental Information (SRETIE), an agency Netherlands, include staff units responsible forunder the MOE, coordinates and administers promoting the development and adoption of suchconsulting and research. In Germany, the major approaches. A comprehensive research programin-house technical resources are the Federal was introduced in Germany to assess the complexEnvironmental Agency and its equivalents at the impacts and costs of environmental management,state level, which provide technical advice to and similar change in research orientation has been

initiated in the U.S. (Box 21).



'For example, under the re-authorization of Resource Conservation and Recovery Act.

2 According to Hunter and Waterman (1990), over sixty difference enforcement techniques have been applied by the U.S.EPA during 1980-1988 to implement the Clean Water Act.

Although states are responsible for monitoring, basic requirements concerning the size and density of monitoringnetworks, pollutants to be measured, monitoring equipment and the types of analysis to required are established at thefederal level (Bennett, 1991).




Conclusions and RecommendationsEffectiveness of Environmental The Gap Between Policy Objectives andManagement Performance

Based on the experience of the OECD countries Environmental management is a process thatreviewed, the key factors influencing the includes the recognition of environmental problems,performance of environmental management in a formulation of policies, selection of policycountry are: implementation instruments, transformation of

The importance of environmental protection policies into laws and regulations, andin political decision making and commitment of implementation and enforcement of these laws andgovernment to address environmental problems, as regulations. Weaknesses in the environmentalinfluenced by (i) the public's concern about the management process and in the administrative andenvironment and access to reliable information; and institutional structure have frequently led to(ii) the existence of vehicles for public pressure on discrepancies between goals and reality when:environmental decisions such as "green" parties, . T1he lack of consensus among majortraditional political parties, NGOs, and community stakeholders during the policy making process led togroups; resistance and reluctance in implementatio--

* Capacity to identify and setfeasible * Unrealistic policy objectives resulted inenvironmental objectives through (i) appropriate misallocation of resources and failures intechniques of defining priorities; (ii) cross-sectoral implementation;and cross-media coordination of policies; and (iii) * Thefailure to coordinate environmentalconsensus building between regulators, businesses policies across economic sectors and environmentaland the general public; media resulted in duplications in regulation and

* Ability of the administrative, legal and resource allocation, often transferring environmentalinstitutional system to translate environmental problems from one medium to another;objectives into actions: (i) institutional, technical, and * The excessive reliance on command-and-controlhuman capacity of the administrative structure; (ii) approaches and uniform standards in policyease and mechanisms of cooperation among implementation restricted the flexibility in findingauthorities at all administrative levels; (iii) degree to cost-effective alternative solutions to achievewhich legislation and regulations consider enviromnental objectives, making complianceadministrative capacities and facilitate policy prohibitively expensive for some polluters;implementation; (iv) flexibility to allow cost-effective * The legislative failure to consider theresponses to environmental regulations; and (v) capabilities of administrative agencies and thegradual adjustment and development of institutions feasibility of implementation led to unfulfilled andto reflect the growing importance assigned to unenforced requirements;environmental issues. * Newly established environmental protection

agencies remained powerless due to the lack ofpolitical commitment to allocate real authority to the



agencies, and the failure of the new institutions to objectives according to their impacts on the welfareadapt to existing ones; of the society. Cost-benefit criteria, based on

* The organization of environmental protection systematic assessment of risks associated withagencies along environmental media prevented or certain environmental problems and the feasibilitylimited effective cross-sectoral and cross-media and costs of solutions, have not been widely used bycoordination; and OECD countries in environmental policy making.

* The traditional, predominantly technical skill This has often led to wasteful allocation of resources,mix of environmental management personnel ad-hoc decisions, and unrealistic objectives.resisted a wider application of cost-effective, Priorities and environmental objectives should be setmarket-based instruments. according to the extent of threat to human health and

ecosystems withi consideration of the costs andfeasibilityMain Lessons Learned and Implications for of implemeztation. Well established internationalDeveloping Countries scienitific knowledge and methodology such as risk-

assessment can assist decision makers in this process.OECD countries faced similar environmental * Environmental management is a complexproblems during the last decades: public health system that embodies conflicting political, economicproblems in urban areas caused by air pollution and geographical interests. Like all politicalfrom industries, households, and growing traffic problems, the management of environmental policyvolumes; the deterioration of water quality due to suffers from inherent constraints on its effectivenessuntreated household sewerage and industrial through a string of difficult compromises and trade-effluents; the improper disposal of municipal and offs. Some of these constraints arise from the factindustrial wastes; the damage and deterioration of that solutions to environmental problems requireforests and biodiversity; and a growing threat of trading off economic resources for results that areglobal impacts of pollution. The environmental difficult to predict or calculate due to imperfectlymanagement systems put in place to address these understood science, uncertain technology, andproblems have made significant progress in controversial value judgments. An additional trade-influencing environmental quality in the countries off typically exists between the conflictingreviewed. Cross-country comparisons reveal both requirements of national and local authorities. Thesimilarities in the factors that shaped thefundamental goals and standards set by national officials do notapproaches of OECD countries to managing their necessarily reflect the interests of the local officialsenvironrment, and differences in the administrative who must enforce them in the face of local economicstructures and regulatonj shjles. and political realities on the ground. Officials in

The experience of OECD countries yields some charge of environmental policy must, therefore,important lessons that developing countries can regularly negotiate not only with their colleagues indraw on when designing environmental the sector ministries, but also with officials atmanagement systems: various levels of government and groups outside the

* Public awareness of environmental government who are essential to theproblems and pressure on ]political decisions played accomplishment of the government's environmentala strong role in the emergence of environmental objectives. A framework and mechanism for consensusprotection in all reviewed OECD countries. building among the major stakeholders of environmentalHowever, significant variation could be observed policy issues should be created. Consultations betweenamong countries in the mechanisms available for the government agencies at different levels, preferably with apublic to access and influence environmental policy high-ranking government official in charge of mediationmaking, and in some cases, public pressure may andfinal decisions, should be given clear priority overhave also led to premature or misdirected policy autocratic decisions.responses. The provision and interpretation of * The traditional piecemeal approach toenvironmental information for the public, and promotion environmental problems proved to be inadequate toof suitable vehicles of public pressure should be key effectively address environmental issues that cutconsiderations in building environmental management across sectors and environmental media. Thatsystems in developing countries. approach restricted efficient priority setting, and

* While public pressure plays an important resulted in inefficiencies by transferringrole in raising political awareness of environmental environmental problems from one medium to anissues, environmental policy making should rely on other, duplicating the efforts and costs of regulationtools and mechanisms in order to set priorities and and control. As a result, many reviewed OECD


Conclusions and Recommendations

countries started to develop legal, administrative strengthening the capacities of existing institutions first.and institutional mechanisms to facilitate integrated Changes in the organizational structure should reflect theenvironmental planning, policy making and evoluhtion of political commitment and technical capacity.implementation. Decision making mechanisms and New government agencies should be appointed only ifprocedures thatfacilitate the consideration of complex they cani be provided with authoriht, political weight, andenvironmental impacts of a given decision or action sufficient technical capacity to pursue their mandate.should be introduced at the early stages of developing An environmental agency should not andenvironmental management, starting with priority areas cannot administer all aspects of a country'sof special concern and trying to build teams of diverse environmental policy. Rather, it should orchestratespecialists dealing with the complex problems of each a system that ensures that environmentalarea. One-stop permitting and environmental impact considerations are properly handled in a myriad ofassessments may be also useful toolsfor this purpose. actions, only some of which fall within its direct

* The primarily technology-based command- responsibility. Government technocrats who areand-control policy implementation instruments that normally accuistomed to making and implementing policyOECD countries traditionally relied on resulted in on their own in a hierarchical bureaucratic structure needinflexibilities in policy implementation, overly costly to acquire negotiation skills, andfind ways to sharesolutions to environmental problems, and over- infornationt.emphasis on technical solutions as opposed to . There are inherent trade-offs in assigningpreventive measures and innovative solutions. As a environmental management tasks to governmentresult, large gaps developed between policy bureaucracies. There is a need to strike a balancerequirements and actual performance. It proved to between the extensive and costly monitoring andbe very difficult to change established regulatory guidance by administrative agencies; and theregimes and instruments. Despite these difficulties, openness of political decision making anda larger political acceptance started to develop for smoothness of procedure. Different politicalincentive instruments in order to increase the cost- preferences and patters of public administration ineffectiveness of environmental policy OECD countries resulted in varying degrees ofimplementation. A balanced mixture of direct administrative discretion assigned to theregulations and incentive policy instruments should be environmental protection agencies.introduced in developing countries as early as possible in . OECD countries have been increasinglyorder to ensure flexibilihy and cost-effectiveness in policy focusing on mechanisms that facilitate changes inimplementation. Relying on ambient qualihy objectives behaviors at the micro level and reduceand leaving details of compliance to polluters, for administrative costs. Countries with limited resourcesexample, could offer such flexibility. of human and technical capabilities should take advantage

* .Environmental management and institutions of methods, such as consultations between the regulatingcontinuously evolve as the various players - agency and regulated entities, and voluntany programs,government officials, polluters, other affected in order to enhance compliance with regulations andparties, environmental activists, and the general reduce costs of enforcement. Such approaches, however,public - gradually learn their roles, and gain only supplement and do not replace regulations andconfidence in the legitimacy and fairness of the traditional enforcement.process and the validity of its results. Experience . There is a trend in several OECD countriesshows that many successful institutional changes to reduce extensive monitoring and replace it withwere slow and incremental. Radical change -- such modeling. Environmental research is becomingas the establishment of a new government agency - more proactive to support environmental prioritycaused difficulties by disturbing well-established setting and policy making, rather than being reactiveinstitutional linkages, constituencies, and decision following political decisions. Excessive monitoringmaking patterns. Environmental protection agencies and research should be avoided in favor of relying ongamed power as the political commitment of the rapid assessment methods, modeling, and the existinggovernment to pursue environmental protection inventony of technologies. The monitoring networkincreased, elected officials transferred more should develop gradually to serve rather than substituteauthority to the agencies, and institutional and actions. Only those data should be collected that can beadministrative linkages became established. A analyzed, interpreted and utilized to improve thegradual approach should be taken during the development performance of environmental management.of environmental institutions, building on and



No universally acceptable environmentalmanagement and institutional model exists. Despitethe relative similarities of environmental problems,achievements, and fundamental environmentalmanagement approaches and choices in thecountries reviewed, there are striking differences intheir institutional patterns and regulatory styles.Political traditions, cultural and national characteristics,the existing legal system, and the structure of publicadministration should all be taken into account whendesigning an environmental management system. Thzeacross-the-board adoption offoreign institutional andregulatory models should be avoided.


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